The Wall Street Journal reported Monday that Israel eavesdropped on closed-door conversations and gathered information from contacts in Europe related to negotiations led by the United States over Iran's nuclear program. A senior US official told the Journal that Israel had leaked this information to Congress Republicans to help them undermine negotiations.

Israeli Defense Minister Moshe Yaalon categorically denied the claims Tuesday.

"There is no such thing as Israel spying on the United States," Yaalon said to Israeli Channel 2 TV News. "It seems someone has an interest in stirring up conflict or adding more bad spirit to the relationship."

The accusations of spying are the latest in a string of acrimonious incidents between the two allies. A senior official in the Israeli government said the key issue was Iran. US President Barack Obama began secretly negotiating with Iran in 2012 in an attempt to impose strict supervision on its nuclear program. Israeli Prime Minister Benjamin Netanyahu believes these negotiations are too lenient on Iran and leave Israel open to attack.

Netanyahu playing hardball

Yet beyond the substance, the style of the Israeli protest has been abrasive. In early March, Netanyahu accepted an invitation by House Speaker John Boehner to speak in Congress against the Iran deal. Neither Boehner nor Netanyahu informed Obama of the invitation, and Netanyahu's acceptance infuriated the White House. Both Obama and Vice President Joe Biden skipped the address, while a packed Congress gave Netanyahu 22 standing ovations.

Shortly after talk of the speech had died down, Netanyahu veered sharply to the right in his reelection campaign last week. He pledged that he would never allow a Palestinian state to emerge under his watch, and cautioned his supporters to vote because "The Arabs are voting in droves." When Israeli voters re-elected Netanyahu by a landslide, Obama seemed publicly disappointed.

Netanyahu apologized for his comments about Arabs in Israel, and backpedaled from his comments regarding the two-state solution, but US Ambassador to Israel Dan Shapiro was skeptical of the reverse.

"It's a confusing situation that raises doubts regarding the true priorities of Israel," Shapiro told Army Radio. "We have to re-evaluate our approach to this question of... how to progress toward the solution of two states for two peoples."

'Both have given up on each other'

Eytan Gilboa, an expert on US-Israel relations at Bar-Ilan University, said he could not remember a worse moment in the two countries' diplomatic history.

"Obama has given up on Netanyahu and Netanyahu has given up on Obama," Gilboa said in a phone interview. He laid the blame on Obama for focusing on Netanyahu's comments on Palestinian statehood rather than taking seriously Israel's opposition to the Iran deal, but said the result was "a widening gap between Republican and Democratic support for Israel."

Gilboa said the risk to Israel is reduced cooperation with the US, although he said the generous American aid to Israel, which amounts to $3 billion a year, is unlikely to stop as it is controlled by Congress.

Alon Liel, a former US Consul General in Atlanta, Georgia, said the verbal jabs between the two countries have never been worse; however, he lamented what he saw as US inaction in the face of Israeli defiance.

"There is a huge gap in American behavior between talking and doing," Liel said. He pointed to a 1992 crisis between Israel and the US, when then-Israeli Prime Minister Yitzhak Shamir refused to stop building settlements in the West Bank, and then-President George H. W. Bush rescinded a $10 billion loan guarantee. That public row ultimately cost Shamir reelection.

By comparison, Liel said, the current US administration has not used tools at its disposal to register its protest with Netanyahu - such as withdrawing its umbrella veto of resolutions against Israel at the United Nations, or supporting Palestinian diplomatic moves for statehood.

Veto may be in question

One potential opportunity for a changed US approach is a Palestinian UN Security Council resolution that would impose a two-year deadline on Israel for withdrawing from the West Bank and east Jerusalem, areas the Palestinians claim for a future state. In the past, the US would have automatically vetoed such a move; now, that veto may not be a given.

The discord between the US and Israel, and the growing partisan nature of support for Israel, puts many American Jews at odds with their Democrat president. Speaking Monday to mostly Jewish attendees at a conference of the dovish J Street movement in Washington DC, Israeli Labor parliamentarian Stav Shaffir condemned the deterioration of the US-Israel relationship. "It is unacceptable to put you, our brothers and sisters, in the impossible position in which you are asked to choose between your love for Israel and your loyalty to the United States," she said.

John Boehner is due to visit Israel at the end of March to bolster Israel's protest of negotiations with Iran.

The deadline for a US-Iran accord on Iran's nuclear program is March 31.