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The star had been scheduled to perform at an event to mark the 60th anniversary of the Jewish state next month but recently informed the Israeli government that she would not be able to attend.
Dick Guttman, a spokesman for the 65-year-old, told Reuters: "She celebrates as always the nation's courage and purpose and flourishing democracy, and is saddened that she cannot be there to do so in person."
He added that Streisand is "a devoted supporter of Israel since her earliest youth".
An Israeli newspaper published a report speculating that Streisand's withdrawal was down to President George W. Bush's planned visit to coincide with the 60th anniversary.
Guttman denied the claims, saying: "That's certainly not the reason. Her affection for Israel certainly supersedes her disaffection for President Bush."
Streisand is reportedly angry that her stepson Josh Brolin will play Bush in Oliver Stone's upcoming biopic W.
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