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President Barack Obama hosted Israeli Prime Minister Benjamin Netanyahu at the White House on Tuesday, seeking to show they have turned the page on a rocky period in relations.Visiting for fence-mending talks, Netanyahu received a warmer welcome than in March. Then, Obama kept him at arm's length in what was widely viewed as a snub over Jewish settlement policy which Washington views as an obstacle to U.S.-led peace efforts.Expectations for a major breakthrough were low. But the meeting, postponed a month ago after a deadly Israeli raid on a Gaza aid flotilla, could test whether the two leaders can overcome recent tensions and work together to restart long-suspended direct Israel-Palestinian peace talks.Both leaders face domestic pressures and need to downplay their differences.Obama is unlikely to risk another diplomatic clash with Netanyahu with pivotal U.S. congressional elections looming in November and pro-Israel sentiment strong among American lawmakers and voters.MAKE-UP VISITAfter an overnight flight from Tel Aviv, Netanyahu stepped out of a limousine and walked into the White House west wing.Carefully choreographing what some analysts have dubbed a "make-up" visit, Obama's aides arranged media coverage after the Oval Office talks, when body language is sure to be scrutinized. Afterward, the leaders will eat lunch together.Last time, there was no photo-op and no meal for Netanyahu, whose visit marked a low point in his relationship with Obama.The rare chill in relations has thawed recently with Obama shifting to a gentler tone and Netanyahu offering conciliatory gestures. The two also have found common ground opposing Iran's nuclear program, which will be high on Tuesday's agenda.Netanyahu plans to assure Obama he wants to upgrade indirect talks with the Palestinians to direct negotiations, which the president sees as vital to the goal of creating a Palestinian state alongside Israel."I am ready to meet (Palestinian) President (Mahmoud) Abbas today and tomorrow and the next day at any place," Netanyahu said last week.While Obama's advisers insist differences have been narrowed, Palestinian leaders say the slow-moving U.S.-mediated talks have not yet made enough progress to justify the start of face-to-face negotiations.A big question hanging over the fragile peace process is whether Netanyahu will extend beyond September a 10-month Israeli moratorium on new housing starts in Jewish settlements in the occupied West Bank, a limited freeze agreed upon only under pressure from Obama.But such a move would put strain on Netanyahu's governing coalition, which includes a key far-right party.PEACEMAKING GOALSObama's aides insist the talks with Netanyahu will not dwell on time-sensitive specifics but will focus instead on broader peacemaking goals.Pushing the peace process forward is central to Obama's agenda for repairing U.S. relations with the Muslim world, which have been strained by wars in Iraq and Afghanistan.Netanyahu's visit was originally scheduled for June 1. That meeting was scrapped after the Israeli raid on a Gaza aid ship on May 31, which sparked an international outcry and prompted Israel to ease its land blockade of the Hamas-ruled territory.Obama is expected to urge Netanyahu to consider further steps to loosen the flow of humanitarian aid and civilian goods to Gaza where he has deemed the situation unsustainable.But Obama has limited room to manoeuvre in pressuring Israel. Hoping to stave off big losses by his Democrats in the mid-term elections, he wants to avoid giving Republicans ammunition to sow public doubt about his commitment to Israel.The administration has worked hard to soften its tone toward Netanyahu after a diplomatic blowup sparked by Israel's March 9 announcement -- during a visit by U.S. Vice President Joe Biden -- of plans to build 1,600 more settler homes in an area of the West Bank it annexed to Jerusalem.For his part, Netanyahu is keen to show the Israeli public that relations with their superpower ally are back on track but will be reluctant to offer major concessions that would anger pro-settler parties in his fragile coalition.In an article coinciding with Netanyahu's visit, the New York Times said U.S. and Israeli public records showed at least 40 American groups collected more than $200 million in tax-deductible gifts for Jewish settlement in the West Bank and East Jerusalem over the last decade.Two years ago, a review by Reuters of U.S. tax records found 13 tax-exempt organizations openly linked to settlements that had raised more than $35 million between 2003 and 2008.(Additional reporting by Jeffrey Heller and Joseph Nasr in Jerusalem; Editing by Bill Trott and Alan Elsner)
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