The to-ing and fro-ing between the Obama administration and the Netanyahu government continues unabated, with each new verbal clash further dimming any chances for an agreement between Israelis and Palestinians. On Friday the Israeli government moved another step closer to lifting its construction freeze by publishing in the Israeli press its plans to build 1,345 new housing units in mostly Jewish neighborhoods of East Jerusalem. Two days later Prime Minister Netanyahu met with Vice President Joe Biden in New Orleans, where the impasse between Jerusalem and Washington remained as firm as ever. 

Two days after that, President Obama, responding to a question at his Jakarta news conference about Israeli construction, first stated that he had not received "a full briefing on Israel's intentions," but then went on to say that such activity was "unhelpful." Naturally, the world press focused on the latter part of Obama's remarks, with breathless headlines proclaiming, in tabloid fashion, "Obama Rips Israel." Not to be outdone, Netanyahu responded to Obama's remarks by pointing out that Jerusalem was "not a settlement," and that the new housing units would not affect the outcome of peace talks. In effect the Israeli Prime Minister dismissed the entire flap as much ado about nothing (his actual term was "overblown"). At which point the State Department issued its own retort, arguing that there was indeed a linkage between construction and the peace process.

President Obama has clearly determined that construction in East Jerusalem is a "red line" that the Israeli government should not cross. The problem is that "East Jerusalem" does not merely consist of Arab neighborhoods in the Old City or even outside its walls. Many districts of what is East Jerusalem have been home to tens of thousands of Israelis for years, even decades. Construction in these neighborhoods never was an obstacle to peace talks until the Obama administration put the Palestinians in an impossible position by insisting that construction should stop. 

Given Washington's position, the Palestinian Authority has had no alternative but to focus on the construction issue. It clearly cannot not take a softer line on construction than Obama has done. Meanwhile, Israelis of all political stripes, including many who otherwise have no truck with Netanyahu, are puzzled and angered by Washington's stance. Many suspect that he is simply trying to curry favor with the Muslim world at Israel's expense. His performance at the Jakarta press conference does nothing to allay that suspicion. After all, having said he needed to study the issue, he need not have gone any further. But he did, and Netanyahu responded in turn and in kind.

Why does the president continue to harp on settlements in East Jerusalem, as opposed to expansion of West Bank settlements that would be dismantled under the terms of any peace agreement between the parties? Obama may feel that he has crossed a Rubicon and must push forward. Or he may feel that he must put Netanyahu in his place; there is no love lost between the two men, and the Israeli reportedly feels that the recent Congressional elections have strengthened his position. Obama may want to show the Israeli that his grasp of the balance of power in Washington is not as strong as he thinks it is. (Which of the two men is right is another matter, and in any event will not be determined for some time.)

There is, however, another possibility: the president may simply not realize that while Israel might give up parts of Jerusalem, as both Prime Ministers Ehud Barak and Ehud Olmert were willing to do, even they were not ready to cede major Jewish neighborhoods in what every prime minister since 1967, of whatever party, considers to be Israel's capital.

Whatever the reason, Obama's behavior in Indonesia, and his constant harping on the construction issue, has complicated his avowed search for an agreement between Israelis and Palestinians. Israel will not give in to his demands, and the Palestinians will not proceed unless the Israelis do so. The peace process is stalemated, and it is up to the president, who has, perhaps unwittingly, brought on this latest dead end on the long-standing saga of Israeli-Palestinian misery, to come up with a way that lets both sides move forward, even if it means that he personally has to take several steps back in order to do so.