WITH Palestinian peace efforts still stalled, a dispute over water placing strain on ties with Jordan, and Syria reportedly intensifying its non conventional weapons acquisition, the last thing Israel needs just now is a major row with its most dependable and powerful ally, the United States.
But that is precisely what it is facing, if a report in yesterday's Washington Post proves true.
The report claims that the FBI is investigating suspicions that Israel maintains an informant within the Clinton administration to obtain access to "sensitive data".
Or, to put it more simply, the FBI is investigating suspicions that the Israelis have been spying on the Americans again.
In the mid 1980s, an American Jewish naval analyst, Jonathan Pollard, was convicted of passing US military secrets to Israel, and was sentenced to a life term in prison, which he is still serving.
The Israeli government has always claimed that Pollard was employed as part of a "rogue operation", unsanctioned by the political leadership in Jerusalem, and unconnected to the official Mossad external intelligence service.
The new allegations, by contrast, do involve the Mossad. According to the Post, the FBI was called in four months ago after the US National Security Agency intercepted a communication between a Mossad man in Washington and his boss in Tel Aviv.
Israel's ambassador in Washington, Mr Eliahu BenElissar, reportedly wanted to activate the informant, codenamed "Mega", to try to get hold of a secret letter sent by the then secretary of state, Mr Warren Christopher, to the Palestinian President, Mr Yasser Arafat. The letter contained US assurances relating to the peace process.
"The ambassador wants me to go to `Mega' to get a copy of this letter," the Washington agent is quoted as saying.
"This is not something we use `Mega' for," his boss reportedly responds.
Mr Ben Elissar and other Israeli officials yesterday denied and derided the report, but some Israeli analysts suggested that it sounded plausible.
The news broke just as the US Middle East peace envoy, Mr Dennis Ross, arrived in Jerusalem to try and restart Israeli Palestinian peace talks.
On Tuesday night, Israel's President, Mr Ezer Weizmann, met Mr Arafat and claimed to have "broken the ice".
However, Mr Arafat is still refusing to meet the Israeli Prime Minister, Mr Benjamin Netanyahu, and is attaching conditions to a resumption of security co operation against terrorism.
At the same time, Mr Netanyahu is trying to resolve problems with Jordan, stemming from Israel's apparent failure to supply the Jordanians with the quantities of water specified in their 1994 peace treaty.
The water dispute led to the cancellation on Tuesday of talks between Mr Netanyahu and Jordan's Crown Prince Hassan, and of a planned joint ceremony in memory of seven Israeli schoolgirls shot dead by a Jordanian soldier on the border two months ago.