TAMPA, Fla. -- It’s government, “not cultures” that define the difference between Israelis and Palestinians. That’s according to Sen. John McCain (R-AZ), who appeared to differ with presumptive Republican nominee Mitt Romney as he tried to defend him.

“I am sure that Gov. Romney was not talking about difference in cultures, or difference in anybody superior or inferior,” said McCain, a chief Romney foreign policy surrogate, today during a news conference after an event here with Sens. Kelly Ayotte (R-NH) and Lindsey Graham (R-SC). “What I’m sure Gov. Romney was talking was that the Israeli economy has grown and prospered in a dramatic fashion. And unfortunately, the Palestinians have not had that same economic development.

“And that goes to the leadership of the Palestinians. Everybody knows that Yasser Arafat was corrupt. And we also know that the Palestinian people have not been blessed with the kind of government that has lower regulations, less taxes, entrepreneurship, which have caused the Israeli economy to be one of the world’s most successful. It has nothing to do with cultures. It has nothing to do with superiority or inferiority. But facts of the booming Israeli economy has to do with the kind of government that the Israeli people have freely and democratically elected which has given them a very prosperous country.”

McCain noted he had not seen or heard Romney’s remarks, but that didn’t stop him from defending what Romney meant.

“I’m sure I know what he was saying, though,” McCain continued. “And what he was saying, though, is that the Israelis have had a government with less regulation, lower taxes, which has allowed them to have a strong and prosperous economy. Unfortunately, when you go over to many of the Palestinian areas, you do not see that same kind of economic development. Governments matter.”

Yesterday at a fundraiser in Israel, Romney said:

“[A]as you come here and you see the GDP per capita for instance in Israel which is about 21,000 dollars and you compare that with the GDP per capita just across the areas managed by the Palestinian Authority which is more like 10,000 dollars per capita you notice a dramatic, stark difference in economic vitality.”

Then paraphrasing a book by a Harvard professor called, “The Wealth and Poverty of Nations,” he added:

“[I]f you could learn anything from the economic history of the world it’s this: culture makes all the difference. Culture makes all the difference. And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things.”

The Associated Press picked up on the comments and noted: “Romney said some economic histories have theorized that ‘culture makes all the difference’.” And that “Palestinian reaction to Romney was swift and pointed.”

It quoted Saeb Erekat, a senior aide to Palestinian President Mahmoud Abbas, who said: "It is a racist statement and this man doesn't realize that the Palestinian economy cannot reach its potential because there is an Israeli occupation.”

And AP added:

“While speaking to U.S. audiences, Romney often highlights culture as a key to economic success and emphasizes the power of the American entrepreneurial spirit compared to the values of other countries. But his decision to highlight cultural differences in a region where such differences have helped fuel violence for generations raises new questions about the former businessman's diplomacy skills.”

The Romney campaign called for a correction from the AP, because of "his remarks being grossly mischaracterized," it claimed.

The campaign also passed around the broader context of his speech – and highlighted that he had made similar remarks in Chicago in March while talking about other countries.

But that context does not appear to change the meaning of what Romney was saying. And he certainly did not make the case that government was a reason for the differences. (That context, sent by the campaign, is copied at the end of this post in full.)

*** UPDATE: NBC's Garrett Haake, traveling with the campaign, reports from Gdansk, Poland, that senior Romney campaign strategist Stuart Stevens told reporters he takes issue with the story, calling it "completely manufactured," "sloppy," and even "invented."

He said the quote from Romney "revolves around an observation the governor has made in his book" and "mentioned in big speeches." The story, he claims, "never should have been written, was not handled responsibly and the Romney campaign was never called for comment. The economic situations for prosperity are interesting to study and important. "

He added that the comments were "not in any way an attempt to slight the Palestinians, and everyone knows that." And he even goes so far as to say: "It is regrettable whenever a story is handled improperly and I think we all agree on that." ***

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McCain also said he agreed with Romney that the American embassy in Israel should be moved to Jerusalem.

“Absolutely. I agree that the embassy should be moved to Jerusalem, and I think that those who are strong supporters of Israel should take note that the President of the United States has failed to take a position on the embassy location,” McCain said. “And it should be in Jerusalem and that has been the subject of numerous resolutions by the United States Congress over the years.”

The American embassy – and every other country's in the world – is currently located in Tel Aviv. At the heart of the long-running peace process dispute between Israelis and Palestinians is where a Palestinian capital would be. Palestinians would like it to be centered in East Jerusalem.

Here are the remarks, passed along by the Romney campaign:

Gov. Romney: “I was thinking this morning as I prepared to come into this room of a discussion I had across the country in the United States about my perceptions about differences between countries. And as you come here and you see the GDP per capita for instance in Israel which is about 21,000 dollars and you compare that with the GDP per capita just across the areas managed by the Palestinian Authority which is more like 10,000 dollars per capita you notice a dramatic, stark difference in economic vitality. And that is also between other countries that are near or next to each other. Chile and Ecuador, Mexico and the United States. I noted that part of my interest when I used to be in the world of business is I would travel to different countries was to understand why there were such enormous disparities in the economic success of various countries. I read a number of books on the topic. One, that is widely acclaimed, is by someone named Jared Diamond called ‘Guns, Germs and Steel,’ which basically says the physical characteristics of the land account for the differences in the success of the people that live there. There is iron ore on the land and so forth. And you look at Israel and you say you have a hard time suggesting that all of the natural resources on the land could account for all the accomplishment of the people here. And likewise other nations that are next door to each other have very similar, in some cases, geographic elements. But then there was a book written by a former Harvard professor named ‘The Wealth and Poverty of Nations.’ And in this book Dr. Landes describes differences that have existed—particularly among the great civilizations that grew and why they grew and why they became great and those that declined and why they declined. And after about 500 pages of this lifelong analysis—this had been his study for his entire life—and he’s in his early 70s at this point, he says this, he says, if you could learn anything from the economic history of the world it’s this: culture makes all the difference. Culture makes all the difference. And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things. One, I recognize the hand of providence in selecting this place. I’m told in a Sunday school class I attended— I think my son Tagg was teaching the class. He’s not here. I look around to see. Of course he’s not here. He was in London. He taught a class in which he was describing the concern on the part of some of the Jews that left Egypt to come to the promised land, that in the promised land was down the River Nile, that would provide the essential water they had enjoyed in Egypt. They came here recognizing that they must be relied upon, themselves and the arm of God to provide rain from the sky. And this therefore represented a sign of faith and a show of faith to come here. That this is a people that has long recognized the purpose in this place and in their lives that is greater than themselves and their own particular interests, but a purpose of accomplishment and caring and building and serving. There’s also something very unusual about the people of this place. And Dan Senor-- And Dan, I saw him this morning, I don’t know where he is, he’s probably out twisting someone’s arm—There’s Dan Senor, co-author of ‘Start-up Nation,’ described-- If you haven’t read the book, you really should-- Described why it is Israel is the leading nation for start-ups in the world. And why businesses one after the other tend to start up in this place. And he goes through some of the cultural elements that have led Israel to become a nation that has begun so many businesses and so many enterprises and that is becomes so successful.” (Mitt Romney, Remarks at Fundraiser, Israel, 7/30/12)

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Gov. Romney: “Now as you know, this November we face a -- an important decision. Our choice will be not just one of party and personality. This election is going to be about principle. Our economic freedom will be on the ballot. And I intend to offer the American people a choice. I spent 25 years in business, by the way as you probably know. My business used to take me to different parts of the world and -- and I was often struck by enormous differences between different nations that in many cases were living right next door to each other. I -- I was interested in the differences in their prosperity and how it was that nations so close to each other in terms of geography, could be so different in terms of prosperity.  I mean look at Mexico and the United States, Israel and Egypt, Chile and Ecuador. And -- and I read a number of books that purported to explain the differences. One of them by Jared Diamond called "Guns, Germs and Steel", argued that the difference was due largely to the minerals in the ground and the -- the physical characteristics, natural resources associated with different countries. But that didn't explain it all, just a part. And then I happened to read a book by Professor David Landes called, "The Wealth and Poverty of Nations." And in that he -- he traces the history of all the great civilizations on the earth. Those that have come and gone.  And after about 500 pages of scholarly analysis he concludes with -- with this observation. He says, "If we learn anything from the economic -- the history of economic development it is this, culture makes all the difference." Culture makes all the difference. Culture. What is it about America's culture that's made us the greatest economic power in the history of the earth? And of course there are a lot of things that come to mind. Our work ethic. Our appreciation for -- for education. The -- the willingness of Americans to take risk. Our commitment to honor contract oath, our family devotion. Our -- our commitment to purpose greater than ourselves. Our patriotism.” (Mitt Romney, Remarks, Chicago, IL, 3/19/12)