HAIFA, ISRAEL –  America's ambassador to Israel has been in damage control mode after his boss, Secretary of State John Kerry, wondered rhetorically if Jewish opposition to peace negotiations with Palestinians was driven by a desire for "a third Intifada."

The flap comes amid diplomatic tension between the two allies. Israeli Prime Minister Benjamin Netanyahu openly lobbied against a U.S.-backed resolution to Iran's pursuit of nuclear weapons last week. And this week has seen U.S. Ambassador Daniel Shapiro doing his best to smooth things over and assure Israel that the U.S. still stands with her in the wake of Kerry’s controversial recent remark in a joint Palestinian-Israel TV interview.

“The alternative to getting back to the [peace] talks is the potential of chaos," Kerry said. "Does Israel want a third Intifada?"

The remark was seen as giving Palestinian factions a green light to go on the offensive should the foundering Kerry-brokered peace talks between Israel and the Palestinians fail to make any progress.

Intifada is an Arabic word for uprising and was the term given to intensified Israeli–Palestinian violence from 1987-1993 and again from 2000 to 2005. In each, hundreds of Israeli soldiers and citizens were killed by Palestinian terrorism and rocket attacks, and thousands of Palestinians were killed in reprisals by Israeli security forces.

Speaking earlier in the week in Jerusalem at the Jewish Federations of North America General Assembly, Shapiro moved to calm rising tensions.

“It is as close as it has ever been and at its heart is an iron-clad American commitment to Israel’s security,” Shapiro said of the U.S.-Israel relationship. “The U.S. is proud to stand with Israel. President Obama underscored this fact during his historic visit to Israel last March. We know that in doing so - because we face common threats in the Middle East from terrorism to proliferation to instability that effect both of us - it means we are enhancing our own security as well.

“That commitment includes strongly supporting Israel’s goal...to achieve a two states for two people resolution to the Israeli-Palestinian conflict. We have no illusions about the challenges, but we will not be daunted in pursuit of this goal.”

Kerry’s “third Intifada” remark came on the day when two Palestinians were killed by Israeli forces at the scene of two separate attacks on Israelis in the West Bank. The following day an Israeli mother and daughter were lucky to suffer only minor injuries after their car was firebombed while driving near Bethlehem.

Despite Shapiro’s comments, tension in Israel and the Palestinian territories appears to be rising, fueled anew by the Israeli Housing Ministry’s announcement on Tuesday of the construction of as many as 20,000 new homes in the disputed West Bank. That figure included a proposal for 1,400 homes in the contentious E1 district that Netanyahu’s office moved quickly to annul in an apparent attempt to dampen international criticism. Palestinian President Mahmoud Abbas, however, announced Wednesday in an interview on Egyptian TV that his negotiating team had resigned.

Earlier Wednesday, a 19-year-old Israeli soldier was stabbed to death by a 16-year-old Palestinian passenger on a bus in the northern Israeli town of Afula. The murder of Eden Attias has sparked a series of demonstrations around Israel against negotiations with the Palestinians which have been taken place as Israel has continued releasing scores of convicted Palestinian murderers and terrorists as a gesture of good faith. It transpired that the teenage murder suspect is the cousin of a convicted Palestinian murderer.

“There is an atmosphere in the [Palestinian] territories that the tactic that [Yasser] Arafat encouraged in the past...is being given the nod by the Palestinians even while the talks have been continuing,” regional analyst Zvi Yehezkeli said on Israel’s Channel 10 in response to the murder of the young soldier.”

The Obama Administration's reaching out to Iran, America's cold shoulder policy to the interim Egyptian regime and Kerry’s “third Intifada” comment, have left many in Israel pondering the true direction of U.S. policy in the region. They are already wondering if the backlash from such policies and statements is already being felt, thanks to newly emboldened Palestinian militants.

“This isn’t an Intifada yet, this is something new," Israeli political commentator Alon Ben David observed Wednesday. "There is an atmosphere that appears to be encouraging these incidents.”

Paul Alster is an Israel-based journalist who can be followed on twitter @ paul_alster and at www.paulalster.com