Almost unnoticed, Binyamin Netanyahu won a major victory last week when Barack Obama backed down on a signature policy initiative. This about-face suggests that US-Israel relations are no longer headed for the disaster I have been fearing. Four months ago, the new US administration unveiled a policy that suddenly placed great emphasis on stopping the growth in Israeli "settlements." (A term I dislike but use here for brevity's sake.) Surprisingly, American officials intended to stop not just residential building for Israelis in the West Bank but even in eastern Jerusalem, a territory legally part of Israel for nearly 30 years. Secretary of State Hillary Clinton launched the initiative on May 27, announcing that the president of the United States "wants to see a stop to settlements - not some settlements, not outposts, not natural growth exceptions," adding for good measure, "And we intend to press that point." On June 4, Obama weighed in: "The United States does not accept the legitimacy of continued Israeli settlements.... It is time for these settlements to stop." A day later, he reiterated that "settlements are an impediment to peace." On June 17, Clinton repeated: "We want to see a stop to the settlements." And so on, in a relentless beat. FOCUSING ON settlements had the inadvertent but predictable effect of instantly impeding diplomatic progress. A delighted Mahmoud Abbas of the Palestinian Authority responded to US demands on Israel by sitting back and declaring that "The Americans are the leaders of the world.... I will wait for Israel to freeze settlements." Never mind that Abbas personally had negotiated with six Israeli prime ministers since 1992, each time without an offer to stop building settlements: why should he now demand less than Obama? In Israel, Obama's diktat prompted a massive popular swing away from him and toward Netanyahu. Further, Netanyahu's offer of even temporary limitations on settlement growth in the West Bank prompted a rebellion within his own Likud Party, led by the up-and-coming Danny Danon. The geniuses of the Obama administration eventually discerned that this double hardening of positions was dooming their naÃ¯ve, hubristic plan to settle the Arab-Israeli conflict within two years. Obama's reconciliation with reality became public on Sept. 22, at a "summit" he sponsored with Abbas and Netanyahu (really, a glorified photo opportunity). Obama threw in the towel there, boasting that "we have made progress" toward settlement of the Israeli-Palestinian conflict and offering as one indication that Israelis "have discussed important steps to restrain settlement activity." Those eight words of muted praise for Netanyahu's minimal concessions have major implications:

Settlements no longer dominate US-Israel relations but have reverted back to their usual irritating but secondary role.

Abbas, who keeps insisting on a settlement freeze as though nothing has happened, suddenly finds himself the odd man out in the triangle.

The center-left faction of the Obama administration (which argues for working with Jerusalem), as my colleague Steven J. Rosen notes, has defeated the far-left faction (which wants to squeeze the Jewish state). IRONICALLY, OBAMA supporters have generally recognized his failure while critics have tended to miss it. A Washington Post editorial referred to the Obama administration's "miscalculations" and Jonathan Freedland, a Guardian columnist, noted that "Obama's friends worry that he has lost face in a region where face matters." In contrast, Obama critics focused on his announcing, just one day after the mock summit, that "America does not accept the legitimacy of continued Israeli settlements" - an abstract reiteration of long-established policy that in no way undoes the concession on settlements. Some of those I admire most missed the good news: John Bolton, former US ambassador to the United Nations, stated that Obama "put Israel on the chopping block," while critics within the Likud Party accused Netanyahu of having "prematurely celebrated" an American policy shift. Not so. Policy winds can always change, of course, but last week's capitulation to reality has the hallmarks of a lasting course correction. I have repeatedly expressed deep worries concerning Obama's policy toward Israel, so when good news does occur (and this is the second time of late), it deserves recognition and celebration. Hats off to Bibi - may he have further successes in nudging US policy to the right track. Next on the agenda: the Middle East's central issue of our time, Iran's nuclear buildup. The writer (www.DanielPipes.org) is director of the Middle East Forum and Taube distinguished visiting fellow at the Hoover Institution of Stanford University.

Lion's Den: Netanyahu's quiet success

Lions Den Netanyahus