ONE THING THAT HAS EMERGED from all the high-powered mid-and late-May Mid-East speechifying is that US President Barack Obama sees the Arab Spring as a golden opportunity for radically enhancing America’s battered standing in the region.The idea is to back the transition to more open societies with American funds and so forge early partnerships with the emerging new leaderships. In his major State Department address on May 19, Obama waived $1 billion in Egyptian debts, promised loan guarantees for $1 billion more and announced the establishment of Eastern European style enterprise funds as well as plans to stimulate trade and exports across the region.After all, if Eastern Europe, in casting off the shackles of authoritarian rule, could have been prized away from the Soviet sphere to the West, why not something similar, over time, in the Arab world? One of the obstacles to a changed perception of America in the region is the festering Israeli-Palestinian conflict. Therefore, for Obama, restarting the stalled peace process is a cardinal American interest. He had hoped that Prime Minister Benjamin Netanyahu, during his much-hyped late May visit, would give him the minimum he needed to bring the Palestinians back to the table. Netanyahu’s failure to do so was more than a personal affront; it was the failure of a close ally to help advance an ambitious new regional policy.To bring Netanyahu on board, Obama reaffirmed America’s commitment to help Israel defend itself militarily and promised to work “against efforts to chip away at Israel’s legitimacy.” With those guarantees in place, he had hoped the Israeli leader would be ready to move to get a peace process going, better still a peace deal. Even a modicum of movement would help regional stability, a major strategic goal for both countries. It would also help America defend Israel in the international arena and derail the planned Palestinian approach to the UN in September for recognition of a Palestinian state in the 1967 borders.Obama’s proposal for reengagement made sense. The parties would commit to a territorial solution based on the 1967 lines with land swaps, discuss borders and security first, but with the proviso that they would need to reach agreement on the other core issues, Jerusalem and refugees, before any actual Israeli withdrawal from Palestinian territory took place. The thinking behind this was that once the Palestinians were satisfied on territory and Israel happy with security, both would be able to make concessions or trade-offs on the other core issues: Israel on Jerusalem, the Palestinians on refugees. A package very similar to this had been shaping up towards the end of the Olmert-Livni Kadima-led administration in late 2008.So why did Netanyahu balk? Was it ideology or politics? Was it because the prime minister doesn’t really believe in the two-state solution and was looking for a way out? Or was it because his hawkish coalition constraints don’t allow him to budge? Either way, Netanyahu skillfully used his American trip to defer peacemaking and reinforce his domestic right-wing electoral base.He followed a three-pronged strategy: Blocking peace moves without being blamed by making an ostensibly generous peace offer coupled with demands he knew the Palestinians couldn’t possibly accept; enhancing his standing as a patriot and strong leader by picking a fight with Obama over the 1967 lines, even though the president never actually endorsed them; and putting his political rivals off balance by claiming a policy based on the “national consensus,” tacitly daring them to challenge it and be found wanting in patriotism.Of the six policy principles he claimed were in the national consensus, at least three were problematic: the demand that Palestinians recognize Israel as a Jewish state as a precondition for talks; the demand for an Israeli military presence along the Jordan River; and the demand that Jerusalem remain the undivided capital solely of Israel.Kadima leaders, for example, had demanded recognition of Israel as a Jewish state at the end of the negotiating process, not as a precondition for talks; they had not demanded a military presence along the Jordan River; and they had been prepared to cede Arab neighborhoods of Jerusalem to Palestine and allow them to serve as its capital. But now they feared to clarify their positions for fear of losing public support, which made it seem as if they backed Netanyahu’s core positions and were only refusing to join his government out of petty personal considerations.Netanyahu aides say they made tremendous behind-the-scenes efforts to persuade Obama to drop his references to the 1967 borders as the basis for renewed negotiations, and that it was only when he refused that Netanyahu decided on confrontation. Obama, however, never made anything like a call for a straight return to the 1967 lines, always including a provision for significant land swaps that would enable a very different border to emerge. Indeed, his use of the “1967 lines with land swaps” formula was designed to help get the Palestinians back to the peace table and was apparently based on secret understandings between President Shimon Peres and Palestinian President Mahmoud Abbas.In what seemed like a direct appeal to the Israeli people, Obama warned that procrastination over the Palestinian issue is not working in Israel’s favor: Demographic facts on the ground will challenge its Jewish majority; technological developments will make it more difficult to defend; a new generation in a changing Arab world will put pressure on continued occupation; international impatience with the conflict is growing and Israel faces mounting delegitimization. His message, that Netanyahu is out of sync with his grand design for the Middle East, is not good for Israel either. “The dream of a Jewish and democratic state cannot be fulfilled with permanent occupation,” he warned.