© Jack Guez/Getty ImagesIsraeli PM Benjamin Netanyahu • press conference • June 8, 2024 • Ramat Gan, Israel
Israeli Prime Minister Benjamin Netanyahu's new feud with the Biden administration is hampering U.S.-Israeli diplomatic efforts to de-escalate tensions on the Lebanese border and avoid war with Hezbollah, U.S. officials say.

Why it matters: Three Biden administration officials tell Axios they are concerned that Netanyahu's actions create "daylight" between the two allies and as a result are further eroding Israel's deterrence power in the region, especially in the eyes of Hezbollah's leader Hassan Nasrallah and the group's main backer Iran.
  • "It is hard to fathom how a video like the one Netanyahu released on Tuesday helps with deterrence. There is nothing like telling Hezbollah that the U.S. is withholding weapons from Israel, which is false, to make them feel emboldened," a senior U.S. official said.
  • Nasrallah said on Wednesday that his militia could still invade northern Israel if the conflict escalates.
  • Israel Defense Forces chief of staff Herzi Halevi said in a visit to the northern border that the IDF still has capabilities Hezbollah doesn't know about. "The enemy will meet these capabilities at the right time," he said.
Driving the news: Speaking in English, Netanyahu said in a video on Tuesday: "It is inconceivable that in the past few months, the administration has been withholding weapons and ammunitions to Israel."
  • In public, the White House expressed bafflement. Press secretary Karine Jean-Pierre noted that only one weapons shipment had been paused since the war began, while billions of dollars of weapons had flowed unimpeded. "We genuinely do not know what he is talking about," she said.
  • White House spokesperson John Kirby in a briefing on Thursday said "Netanyahu's video was very disappointing, perplexing and vexing. We expressed our concern to the Israeli government at different levels."
  • "You have to ask Netanyahu what he was thinking."
In private, Biden's team was angry and shocked by Netanyahu's ingratitude. Some U.S. officials who watched Netanyahu's video said the prime minister looked "unhinged."
  • The Prime Minister's office didn't comment for this story.
  • The White House as a result decided to cancel a high-level U.S.-Israel meeting about Iran and Lebanon that was scheduled for Thursday, according to U.S. officials.
The latest: Netanyahu met on Wednesday with a delegation of bipartisan members of Congress led by Rep. Steny Hoyer (D-Md.).
  • Netanyahu said in a statement that he told the group he "appreciates the bipartisan support for Israel" and said "he hopes that the arms issue will be resolved in the near future."
Behind the scenes: Netanyahu's video was released as President Biden's envoy Amos Hochstein was shuttling between Jerusalem and Beirut to try to de-escalate the fighting with Hezbollah.
  • Hochstein was scheduled to meet Netanyahu on Tuesday evening to brief him on his talks with Lebanese officials and discuss ways to avoid a war.
  • According to three sources briefed on the the issue, the meeting was "bad."
Hochstein and the U.S. ambassador to Israel Jack Lew found themselves spending a large part of the meeting delivering a harsh message to Netanyahu about the crisis the Israeli prime minister sparked, the sources said.
  • When Hochstein and Lew told him his accusations about the U.S. withholding weapons were false, Netanyahu claimed he was basing his remarks in the video on information from the Israeli Ministry of Defense, a source with knowledge of the discussion said.
  • A spokesperson for Minister of Defense Yoav Gallant declined to comment on Netanyahu's claims and said: "We regret irresponsible leaks and statements."
Between the lines: All U.S. officials interviewed for this story said they don't understand what Netanyahu was trying to do and what he was hoping to achieve other than scoring political points domestically.
  • Some U.S. officials speculated Netanyahu's comments might have been been part of a competition for public credit with Gallant, who is expected to visit Washington next week to discuss ways of releasing the paused weapons shipment.
  • A few weeks ago, one of Biden's senior aides told Netanyahu's advisers that when they complain that U.S. public criticism of Israel makes Hezbollah and Iran feel more confident, they should first look at whether Israel's own actions create the "daylight" they are concerned about.
  • Biden "doesn't try to create daylight with Israel, he does the opposite. But Netanyahu is a master in creating daylight for his own politics," a U.S. official said.
What to watch: The U.S.-Israel strategic meeting planned for this week was canceled, but Netanyahu's confidants minister Ron Dermer and national security adviser Tzachi Hanegbi will be at the White House on Thursday for a meeting with Biden's national security adviser Jake Sullivan and other officials.
  • But U.S. officials said these meetings will be overshadowed by the crisis and won't produce the in-depth discussion and coordination on next steps in Lebanon and Iran that is badly needed right now.
  • U.S. officials said they are highly concerned that both Israel and Hezbollah are miscalculating when they escalate the rhetoric and the fighting on the ground while thinking they can avoid an all out war.