Forget President Barack Obama and the Arabs for a moment. Did Prime Minister Binyamin Netanyahu's speech at Bar-Ilan University last night outlining his vision of Arab-Israel peace satisfy mainstream Israelis? Did it contribute to shaping an Israeli consensus? The answer: Yes. Since he took office in March, the premier has been promising to articulate an approach to negotiations with the Palestinians. He skipped the AIPAC policy conference in early May because he wanted Obama to be the first to hear his "policy reassessment." Yet when he arrived at the White House on May 18, he seemingly forgot to pack a coherent proposal. Instead, Obama greeted him with a reiteration of George W. Bush's call for a Palestinian state, and with a vigorous advocacy of America's long-standing demand for a settlement freeze. Most Americans favor a two-state solution and think it would be good for Israel. Most Israelis acknowledge that the creation of a Palestinian state is in their national interest. The concern has been: What kind of Palestinian state? They don't want the prototype to be Hamas's mini-state in the Gaza Strip. It is the Palestinians who have opposed sharing this land, justifying our fears of their intentions. Since the days of the UN Partition Plan, through Ehud Barak's territorial offer in 2000 and Ehud Olmert's in 2008, it is the Palestinians who have been saying no. Lately, however, because Netanyahu hadn't explicitly endorsed the two-state solution, the perception was growing that Israel was the problem. Last Monday, Netanyahu telephoned Obama to tell him of his plans to finally deliver that long-awaited policy reassessment. The build-up was worth it. The Bar-Ilan speech was of historic importance. LAST NIGHT, Netanyahu announced his support for a demilitarized Palestinian state. The territorial details will need to be negotiated. And the Palestinian leadership will have to recognize Israel as a Jewish state, and abandon the demand to resettle in it millions of descendants of the original 650,000 Arab refugees from the War of Independence. This offer - coming from a Likud leader - is momentous. Now the ball is in the Arab court. Will the Arab states accept the idea of a demilitarized Palestine living side by side with a Jewish Israel? Will the international community - and particularly the Obama administration - embrace Netanyahu's vision? If they do not, it will shatter the hopes of mainstream Israelis and doom the prospects of peace. Netanyahu's speech demonstrated that Israeli governments honor the commitments of their predecessors. It will be interesting now to see whether the White House, implicitly or explicitly, stands behind George W. Bush's April 2004 "1967-plus" letter. Though that commitment was also overwhelmingly endorsed by congressional resolutions (and supported by then senator Hillary Clinton), Obama has yet to back it. Fresh surveys show most Americans do. Netanyahu was right to say that settlements are not the main obstacle to peace. While most Israelis do not support unauthorized outposts, they do want to find a reasonable compromise with the US over natural growth in settlements that Israel intends to retain under a permanent accord. A NEW survey by The Israel Project shows that American popular support for Israel, while strong, is ebbing. Even among staunchly pro-Israel Republicans, support dropped from 72 percent to 65%; and 50% to 38% among Democrats in the past six months. Fewer Americans think Israel is committed to peace. Conversely, last year 61% of Americans thought the Palestinians were not committed to peace. Now, only 49% think they are the problem. To state the obvious: Washington is Israel's only steadfast military and diplomatic ally; US military aid for 2009 is $2.55 billion (25% of which may be spent locally). But the alliance is vital for far more than financial reasons. We cannot take this relationship for granted. No doubt an appreciation of this reality informed Netanyahu's remarks. The premier's speech was delivered the day after Mahmoud Ahmadinejad solidified his leadership in Iran, and as infiltration attempts and Kassam launchings from Gaza appear to be on the rise. Now is the time for Israelis to pull together, for the national interest to take precedence over partisan preferences. Above all, now is the time for the US to persuade the Palestinians to return to the negotiating table and pursue Netanyahu's call for a viable reconciliation.