With a series of astute political gambits in recent days, Netanyahu has defused right-wing criticism, found a workable middle-ground with the US, and attracted center-left support. But the strategic challenge of peacemaking with the unbending Palestinians remains as daunting as it ever was. It was a highly impressive display of news management. Late last Thursday night, just as night editors at the nation's newspapers were finalizing their Friday front pages, word reached us from the Prime Minister's Office that Binyamin Netanyahu would within days announce hundreds of new housing starts at settlements in the West Bank. The timing was critical: Were it not for the arrival of this dramatic news, many of those weekend front pages would have been dominated by reports of the increasingly open opposition to Netanyahu from within his own Likud party. Most members of the party's Knesset faction were already registered to speak at what would have been an anti-Bibi event in everything bar name at the Likud's Tel Aviv headquarters on Wednesday of this week - an event dedicated to the championing of settlement expansion and the defiance of US-led efforts to thwart that growth. The weekend headlines would likely have further emboldened Netanyahu's internal opponents, giving new momentum to their challenge to his authority. Some leading Likud figures - Bennie Begin, Moshe Ya'alon - who had hitherto largely ducked out of the spotlight, might have deemed it appropriate to make their positions clearer on the issue, to the prime minister's discomfort. Who knew where the spiral of internal Likud protest would have led? Instead, the deliberately nonspecific revelation that hundreds of new homes were about to be approved pushed the Likud protesters off the Friday front pages, neutered much of the gathering challenge, and defused the threat posed by Wednesday's event. Score one to the prime minister. BUT THE news from the Prime Minister's Office didn't speak only of new building in Judea and Samaria. It also contained the tantalizing promise, once those new building starts had been green-lighted, that Netanyahu would consider a moratorium on further new construction at the settlements, to give room for a diplomatic process to resume and hopefully flourish. Given that the Netanyahu government has been engaged for months in intensive contacts with the Obama administration, notably via the high-level envoy George Mitchell, it was immediately clear that, behind the scenes, a deal had been done: The prime minister was pacifying the more pacifiable of his domestic critics on the right, while simultaneously mollifying the Obama administration. First the building, then the freeze. Both Jerusalem and Washington have plainly given ground here. The very fact that Netanyahu is ready to contemplate a moratorium is unthinkable to some of the more hawkish members of the Likud and rightist parties beyond. And further investigation since last weekend has revealed that the hundreds of promised new building starts, rather than heralding development in previously neglected areas of the territories, represent a very stale bone indeed: 149 homes in Har Gilo, 124 in the Ma'aleh Adumim area, 84 in Modi'in Illit, 76 in Givat Ze'ev... These are projects largely within the major settlement blocs, and the new approvals largely represent the renewed approval of construction plans that were already fairly well-advanced. It's a case of new permits, on top of permits given by the last government, for projects that had already been approved, as one settlement council head dryly observed. But that, of course, is precisely the point that Netanyahu and his colleagues will have been stressing to the Americans. "Look at the fine print," they will have been saying. "We're paying lip service to ongoing settlement construction, but this is small potatoes - projects in areas you know we insist on retaining anyway, under any final-status accord. The main prize is the freeze, and we're going along with you on that." Publicly, the White House has condemned the new-old building plans, but plainly Netanyahu's deft build-then-freeze combination has not derailed the Obama administration's plans to broker a formal resumption of substantive Israeli-Palestinian talks in the next few weeks, possibly with a launch that coincides with the UN General Assembly session. According to some in Jerusalem, moreover, the months of talks on the parameters of a freeze have also gradually yielded a softening of the initial absolute American demand that all building come to a halt everywhere beyond the Green Line. These voices close to Netanyahu insist that Jerusalem is simply not part of the conversation - in other words, that even come the freeze, building in Jewish neighborhoods of east Jerusalem will not be affected. That doesn't mean the government will start approving big new projects in potentially incendiary areas. But it hasn't formally committed itself not to. Not only has Netanyahu managed to keep some building without losing the Americans, but his embrace of the two-state solution and readiness in principle to halt settlement construction toward that goal has also attracted unexpected support from certain Israeli doves - the likes of former Shin Bet chiefs Ami Ayalon and Ya'acov Peri, former chief of staff Amnon Lipkin-Shahak and even Dalia Rabin. The political center and center left, this signals, will bolster Netanyahu so long as he pursues a serious diplomatic channel. Score two for the prime minister. THE BUILD-and-freeze combination prompted a predictable outpouring of anger from the Palestinian leadership, meanwhile, and a great deal of behind-the-scenes discomfort. The sense in Ramallah that President Barack Obama was firmly on their side, and wouldn't give the Israelis a construction inch, was rudely shattered. (It may well be, indeed, that the series of Smith Research polls conducted for The Jerusalem Post in recent months, showing how overwhelmingly Israelis believe the new US administration to be siding with the Palestinians, played a part in softening the American position.) But the Palestinians can't afford to alienate the Americans, and were therefore unable to react to Netanyahu's gambit by announcing a refusal to have anything to do with peace negotiations for the foreseeable future. Indeed, Palestinian Authority President Mahmoud Abbas, while still insisting that all settlement construction be halted immediately, is no longer placing this demand as a precondition for meeting with Netanyahu. Score three for the prime minister. BUT IF Netanyahu has achieved significant tactical success in the past few days, the strategic challenges remain as daunting as ever. The Palestinians may have been outmaneuvered in the short-term, but their final-status positions remain unchanged. Ehud Olmert failed to persuade Abbas to accept almost all of the West Bank for a Palestinian state, because the PA leader insists on both the "right of return" and a 100 percent Israeli withdrawal from territory captured in the 1967 war, emphatically including Jerusalem. Netanyahu, who has made plain he will offer less than Olmert, if and when substantive talks resume, will run into the very same adamant refusal. People close to the prime minister say that the prospects for quick progress in any renewed talks will depend on how far Arab nations are prepared to move toward normalizing relations with Israel - the goodwill measures that the US administration has been at such pains to extract, with such limited success to date. But ultimately, Netanyahu has predicated his two-state vision on driving a hard bargain territorially with the Palestinians. And the Olmert lesson is that even driving a soft bargain didn't produce a breakthrough. Worse still, signs are multiplying that the absurdly misnamed "unity" partnership of Fatah and Hamas may be revived sooner rather than later - a development that can only spell greater Palestinian inflexibility. Moreover, a resumption of this unholy alliance would likely see the political demise of Salaam Fayad, the PA prime minister under whose stewardship the West Bank economy has begun to grow, and whose virtues are so enthusiastically cited by most every Israeli and international leader with whom he comes into contact. Fayad is widely regarded by these interlocutors as a pragmatist, a no-nonsense, get-things-done obsessive who is seeking to build from the bottom-up, improving the lives of ordinary Palestinians. As such, Hamas openly despises him as an American poodle. Abbas privately fears him as a rival. The establishment of a Fatah-Hamas government would almost certainly result in his ouster, justified in the purported interest of "national unity" - the paramount value that brooks no dispute. SIXTEEN YEARS ago, at about this time of year, Yitzhak Rabin stood on the White House lawn and, when Yasser Arafat proffered his hand in the ostensible cause of peace, Rabin hesitated. Seven years later, when he failed to secure Arafat's approval for an accord designed to put an end, once and for all, to the Israeli-Palestinian conflict, Ehud Barak understood that hesitation all too well. Nine years further on, Netanyahu is drawing closer to another attempt at negotiation, with Arafat's successor. Unlike Rabin and Barak, and unlike Olmert, he comes from the center-right, heads a relatively stable coalition, and can fairly claim to speak for a sizable Israeli majority. He seems to have finessed many of his right-wing critics, impressed some in the center-left, found a workable arrangement with the US administration, and embraced a potentially viable two-state solution. What hasn't changed, at least not for the better, is the Palestinian position - the same maximalist stances, the same relentless anti-Israel incitement, and the same refusal by leaders to acknowledge and convey to their people the legitimacy of Israel. If Obama and Netanyahu have found a middle ground, there is sadly no evidence that Abbas is traveling in the same direction. For the hesitant Rabin of 1993, as a consequence, substitute a profoundly wary Israel in 2009 - an Israel backing a prime minister heading into negotiations expecting rejection, deadlock and worse. How fervently we wish to be proved wrong.