BERLIN/JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu cancelled talks on Tuesday with Germany's visiting foreign minister, snubbing Sigmar Gabriel over his decision to meet groups critical of Israel's treatment of Palestinians.
The dispute threatened to widen a rift between Israel and Germany over the Palestinian issue. Berlin has been increasingly critical of the settlement policies of Netanyahu's right-wing government in occupied territory Palestinians seek for a state.
"My policy is clear: Not to meet with diplomats who visit Israel and engage with organisations that slander Israeli soldiers and seek to have them put on trial as war criminals," Netanyahu said in Jerusalem late on Tuesday.
He said he was leading Israel "through proud nationalist polices and not by bowing our heads and grovelling".
But he emphasised that relations with Germany would remain strong and important.
Gabriel told reporters the decision was "not nice" and caught him by surprise since he generally had an open relationship with Netanyahu, but added that it did not spell "the end of diplomatic ties between the two countries".
"I regret it greatly. And, I'll say it openly, we cannot become a political football for Israeli domestic politics," he said. "But it's not a catastrophe. There will be another occasion to meet somewhere ... We have to let things cool off."
On Monday, an Israeli official had said Netanyahu, who is also foreign minister, would not see Gabriel if he went ahead with meeting the Israeli group "Breaking the Silence".
The organisation, a frequent target of criticism by the Israeli government, collects testimony from Israeli veterans about the military's treatment of Palestinians in the Israeli-occupied West Bank.
Gabriel underscored the importance of Germany's ties to Israel during a meeting with Israeli President Reuven Rivlin: "You can absolutely be sure we are committed to the friendship, the partnership and the special relationship with Israel and nothing will change this."
Gabriel told reporters he found it noteworthy that Rivlin repeatedly emphasised that Israel was a democratic country with a right to freedom of expression.
Germany regards itself as one of Israel's closest allies and the cooperation and trade links are extensive. However, the legacy of the Nazi-era Holocaust, in which six million Jews were killed during World War Two, means relations are highly charged.
Gabriel said it was normal to talk to civil society representatives in Israel, a view that drew expressions of support from Israeli opposition leaders.
He said it would be unthinkable if Israeli politicians were not allowed to meet with critics of the German government.
Breaking the Silence declined to comment on Netanyahu's decision to snub Gabriel, or on the details of its planned meeting with the German minister, which the Peace Now movement said it would also attend along with the B'Tselem rights group.
Roderich Kiesewetter, a lawmaker from German Chancellor Angela Merkel's Christian Democratic Union party, told Die Welt newspaper the Israeli leader had "made a mistake" in shunning Gabriel, "a good friend of Israel".
B'Tselem issued a statement late on Tuesday and, although it did not give any details of the meeting with Gabriel, it was highly critical of Netanyahu and the Israeli government's policies and vowed to continue opposing them.
"As long as it does not meet the minimum conditions of democracy, Israel cannot enjoy the privileges that go with being a ... member of the club of democratic countries," the statement said.
In February, Netanyahu ordered a reprimand of the Belgian ambassador after Belgian Prime Minister Charles Michel met with representatives of Breaking the Silence and B'Tselem during his visit to the region.
Right-wing Israeli politicians accuse the groups of damaging Israel's reputation abroad and putting Israeli soldiers and officials at risk of prosecution. They dislike the fact that some NGOs receive funds from EU countries.
Gabriel, a Social Democrat who has spoken publicly about his rift with his late father, a convinced Nazi, is visiting the Middle East to press for a two-state solution to the conflict between Israelis and Palestinians.
Germany in March cancelled an annual meeting of German and Israeli leaders planned for May amid rising frustration in Berlin with settlement activity in the West Bank.
In 2016, Israel passed a law requiring non-government organisations that receive more than half their funding from foreign governments or bodies to provide details of their donations. The legislation was largely seen as targeting left-wing groups such as Breaking the Silence and B'tselem, and it drew international criticism.
Additional reporting by Luke Baker and Ori Lewis in Jerusalem, Andrea Shalal in Berlin; editing by Mark Heinrich