Barack Obama doesn't want to impose a peace deal. He wants to create an Israeli government that can negotiate one, writes Graham Usher in New York The Middle East peace process is in thrall to Israel's decision to build 1,600 Jewish homes in the Ramat Shlomo settlement in occupied East Jerusalem. On 28 March the Arab League, meeting in Sirte, Libya, tied its backing for future negotiations to Tel Aviv "stopping all settlements in occupied Palestinian territories, including Jerusalem". The day before, Palestinian President Mahmoud Abbas said the same, burying for now any chance of American mediated "proximity" talks between Israel and the Palestine Liberation Organisation. The crisis has endured not because of Jewish settlement construction in Arab East Jerusalem, which, as Prime Minister Binyamin Netanyahu says, has been the constant policy of every Israeli government since 1967. It has endured because of a hardening American stance to that policy and an Israeli government that insists upon it. Last year United States President Barack Obama tempered his demand for a complete settlement freeze throughout the occupied territories in deference to Netanyahu. The Israeli prime minister said such a sweeping policy change would wreck his coalition and could fracture the army in the West Bank. Obama is now making the same demand in full knowledge that it will tear Netanyahu's coalition apart. That is the aim. The US president clearly no longer sees Netanyahu as part of the solution but as part of the problem. The change was registered most tangibly when the two men met in Washington last week like "thieves in the night", in the phrase of one Israeli commentator. The president was fresh from his success of getting his signature health reform bill through Congress, a victory that overnight changed his profile from a leader on the ropes to a fighter who can win. Netanyahu was still basking in the rapture of his reception by 7,500 delegates at the annual conference of the American Israel Public Affairs Committee (AIPAC). He had dismissed American demands to rescind the Ramat Shlomo decision with a wave of the hand. "Jerusalem is not a settlement," he said. "It is our capital." It was a battle of wills, in which, this time, the American president did not back down. At the meeting he told Netanyahu Israel's various offers to get negotiations restarted were "insufficient". Instead, he laid down a choice to the Israeli leader: engage seriously in negotiations with a view to ending the conflict, which is an American national interest, or maintain your current ultra-nationalist and messianic coalition, which is not. Israeli sources say Obama then made several demands of Netanyahu. In East Jerusalem he wanted the Israeli leader to reverse the Ramat Shlomo decision; end all new settlement construction; refrain from demolishing Palestinian homes; and allow Palestinian "commercial interest" offices to be opened. Obama also reaffirmed the Palestinian position that any proximity talks had to include substantive issues like settlements and borders and not mere "procedures". Finally, he wanted the Israeli army to redeploy to positions held before the outbreak of the Intifada Al-Aqsa in September 2000: in effect restoring the Palestinian Authority to full security control in the eight main West Bank Palestinian cities. Netanyahu was said to be "excessively concerned and upset" by these ultimatums. It's easy to see why. He knows he can barely meet one of them and keep his coalition intact. Obama knows it too. Simultaneous with raising the heat on Netanyahu, his administration has been urging Tzipi Livni, head of Israel's main opposition Kadima Party, to consider joining the government. It has also asked the coalition Labour Party to draw a line between itself and nationalist and religious parties opposed to a peace agreement with the Palestinians. The aim is to forge a new centrist coalition out of the ruins of a rightist one. With such a government, Obama believes he can revert to what had been his grand plan for Middle East peace: a resumption of Israeli- Palestinian negotiations from the point they left off under the premiership of Kadima's Ehud Olmert. Combined with a settlement freeze and PA Prime Minister Salam Fayyad's plan to build national institutions, Obama believes an agreement can be reached within 24 months. On the bases of understandings agreed during a decade of negotiations Abbas has said a deal can be reached in six. But it is improbable any deal can be negotiated with an Israeli government that has Netanyahu at the head. It's not just because he thinks the PA is incapable of governance. It is because he knows a real Palestinian state would pose a mortal threat to his desire to colonise what remains of Arab East Jerusalem and keep large swathes of the West Bank. After his meeting with Obama, he also knows he is in the fight of his political life. In 1998-99 then-US president Bill Clinton -- in a quiet pincer movement with Israel's Labour Party opposition and the Yasser Arafat-led PA -- so out-flanked the first Netanyahu coalition that it fell apart under its own contradictions. Obama wants to play the same trick twice.
