•US Secretary of State has been labelled an 'anti Semite' for warning of a possible economic boycott if Israel failed to reach a peace accord with the Palestinians.
John Kerry, the US secretary of state, triggered an angry backlash from Israeli leaders on Sunday after warning Israel faces economic boycott if it failed to reach a peace accord with the Palestinians.
The uproar came as Mr Kerry held cordial talks with his Iranian counterpart, Mohammad Javad Zarif in Munich at which the pair vowed to intensify nuclear diplomacy.
Ministers in Benjamin Netanyahu's cabinet accused Mr Kerry of effectively endorsing "anti-Semitic" efforts to impose sanctions on Israel by issuing the warning.
"The risks are very high for Israel," Mr Kerry told the conference. "People are talking about boycott. That will intensify in the case of failure.
"Do they want a failure that then begs whatever may come in the form of a response from disappointed Palestinians and the Arab community?"
While the US secretary of state's remarks were made against a backdrop of new US drawn up, negotiated and approved EU regulations barring deals with Israeli businesses based in West Bank settlements, they provoked accusations that he was threatening Israel in on-going peace talks with the Palestinians.
Yuval Steinitz, the intelligence and strategic affairs minister and a close ally of Mr Netanyahu, the Israeli prime minister, said America's top diplomat was "holding a gun to [Israel's] head".
"The things Kerry said are hurtful, they are unfair and they are intolerable," Mr Steinitz told reporters.
"Israel cannot be expected to negotiate with a gun to its head when we are discussing the matters which are most critical to our national interests."
Naftali Bennett, the industry minister and leader of the Jewish Home party, said: "We expect of our friends in the world to stand by our side against the attempts to impose an anti-Semitic boycott on Israel, and not to be their mouthpiece."
His comments were echoed by Adi Mintz, a senior official in the Settler's Council, who accused Mr Kerry of "an anti-Semitic initiative".
"The anti-Semites have always resorted to a very simple method - hit the Jews in their pockets," he told Israel's Channel 10 TV station.
Mr Netanyahu was more restrained, telling Sunday's cabinet meeting that efforts to impose a boycott were "immoral and unjust" and doomed to fail.
The row overshadowed a meeting on Sunday between Mr Kerry and Mr Zarif, Iran's foreign minister, to discuss forthcoming talks on Tehran's nuclear programme, scheduled to resume in Vienna this month.