In what CNN described as an "unusually blunt" speech at a Washington think tank conference Friday, Panetta urged the Israelis to change their approach to peace negotiations with Palestinians and its regional neighbors of Egypt, Turkey and Jordan.
"Unfortunately, over the past year, we have seen Israel's isolation from its traditional security partners in the region grow, and the pursuit of a comprehensive Middle East peace has effectively been put on hold," he said. "The problem right now is we can't get them to the damn table to at least sit down and begin to discuss their differences."
Panetta was echoing his predecessor, Robert Gates, who in September publicly bemoaned Israel's sluggishness on advancing peace talks, The Washington Post reported.
Tempering his criticism, Panetta told the conference Israel will "always have the unshakeable backing of the United States."