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(Haaretz) — An internal report of the Office of Inspector General for the U.S. Department of State recommends terminating the U.S. loan guarantee program to Israel at the end of 2011.

The report, which deals with the performance of the U.S. embassy in Israel, says American diplomats have difficulty mustering support for the Obama administration’s policies and implies the embassy failed completely in its PR efforts during the Obama administration.

“A fragile Israeli coalition government leans toward the views of its members from the nationalist and religious right, creating a challenge for diplomats seeking to build support for U.S. policies,” the report says.

The unclassified version of the report was distributed in the State Department in March. At the same time the OIG released a report about the Consulate General Jerusalem. Haaretz has obtained copies of both reports, whose findings are published here for the first time.

The State Department’s comptroller’s team came to Tel Aviv in October 2010 and spent two weeks talking to its American diplomats.

The reports portray a problematic picture of the missions’ performance in Israel.

The Tel Aviv embassy faces intense challenges, generated by Israel’s current government, negative public opinion toward President Obama, a sensitive political environment and a vibrant media scene, the report says.

It finds that the embassy’s annual public relations budget, intended to influence public opinion in Israel, is about $7 million a year, or roughly NIS 25 million.