WASHINGTON (CNN) -- Israel is discussing an "accommodation" on settlement activities to show good faith with the Obama administration, a senior Israeli official told CNN on Tuesday.
Settlers rebuild a structure on June 9 destroyed by Israeli security forces near Kokhav Ha Shahar settlement.
The comment came in advance of high-level meetings this week between two governments. The official conceded the U.S. and Israel have a "less intimate" relationship than during the Bush administration.
A major Israeli goal of this week's talks is to revive the "strategic dialogue" that the Israeli official said existed in the Bush administration between the secretary of state and the foreign minister.
The official, speaking on condition of anonymity because of the sensitivity of the issues, also complained about what he called a "straw man" argument about Israeli settlements. Noting that Israel gave up substantial settlements in its peace agreement with Egypt in the late 1970s, the official said the argument that settlements are an obstacle to peace talks was not valid in Israel's view.
Nonetheless, the official said the Netanyahu government was working with Obama special envoy George Mitchell on what the official called a possible "accommodation" on the U.S. administration's demand that Israel freeze settlements.
Under discussion, this and another Israeli source said, was a proposal in which Israel would agree to no new settlements, no confiscation of new land and a limit on so-called "natural growth" of existing settlements to allow access to vital services.
One of the sources said a potential obstacle was Israel's position that its laws and other administrative rules precluded it from blocking projects already approved and financed. But both sources voiced optimism some accommodation could be reached that created "no new facts on the ground." The more senior official spoke convincingly that an agreement could be reached, but said there was no timetable.
The senior official also offered a sober scorecard on the Obama administration's track record in foreign policy so far -- saying President Obama had without a doubt bolstered the image of America in the world.
But then the official listed overtures to North Korea and Iran, and winning international help with new troops in Afghanistan, as top Obama priorities and asked, "Has it worked?"
This official characterized the administration's response to the Iranian elections as "not strong" and "not a serious response" and said the challenge now was to see whether Obama would favor strong, new United Nations sanctions.
Given the volatile economic and political climate in Iran, the official said new sanctions would shift the burden to Tehran, or as he put it, "make the dilemma theirs, not ours."
In this regard, the official said, Israel strongly supported the administration's effort to repair frayed relations with Moscow and said Obama's trip to Russia next month was critical for influencing developments in Iran, Pakistan and Afghanistan.
The Israeli delegation is led by Foreign Minister Avigdor Lieberman and plans meetings with top U.S. officials including Vice President Joe Biden, Secretary of State Hillary Clinton and National Security Adviser Jim Jones.
Asked whether it was fair to say relations between Israel and the United States were "less friendly" now than in the Bush administration, the official said the two nations were deep and trusting friends but offered the term "less intimate" to describe what he said were significant differences in substance and in tone.
Former President Bush, for example, had good direct lines of communications with Prime Ministers Ariel Sharon and Ehud Olmert, while Obama and Prime Minister Benjamin Netanyahu, at least at the moment, lack such a direct channel.
The official cautioned against reading too much into this, saying both governments were relatively young. But at the same time, he said policy differences had caused early strains. Another Israeli official on hand for the conversation, though, voiced the opinion there was "a growing understanding."
The official said from the Israeli standpoint, it was important that the Obama White House be as publicly tough on other parties as it has been on Israel over settlements.
For example, this official asked rhetorically what Obama had gained from his talks in Riyadh with King Abdullah of Saudi Arabia.
The official noted that Palestinian President Mahmoud Abbas "has to go begging" on a virtual monthly basis across the Arab world for help paying salaries because, he said, Saudi and other oil-rich Arab nations often make pledges of support but do not offer large sums of money up front.
The official said in communications through "private channels" Israel has made clear to the Saudis it would reciprocate with favorable access gestures to help Palestinian workers if the regime would make a significant economic investment in the Palestinian territories. He mentioned a $10 billion figure.
Such "capacity building" steps to improve the Palestinians' economic and internal security capabilities are viewed by the Netanyahu government as critical to any progress in the region.
The official said Saudi Arabia and other Arab nations also could improve the climate for diplomacy by offering overflight rights to Israeli flights and visas to encourage tourism.
On the Iranian presidential elections, the official said there " was no doubt" from Israel's perspective that President Mahmoud Ahmadinejad "stole" the election because "he couldn't risk a runoff" and so needed to get 60 percent in the first balloting.
This official said it is the Israeli assessment that Iran's nuclear program is "accelerating" and is now about three years away from having an operational nuclear warhead.