Nobody ever said achieving a solution to the Palestinian issue was going to be easy, and the Obama Administration has not been disappointed. 

The US gave gave the Israelis very little wiggle room in addressing its demands for a halt to settlement growth, knowing that PM Netanyahu was holding together a rightist coalition that would likely not hold if he gave much ground on the issue. For his part, Palestinian President Mahmoud Abbas is going to find it incredibly difficult to garner Palestinian support for talks if settlement construction continues (or at least continues beyond what will be a face-saving interim solution).

But on settlement construction, US ability to pressure Israel is limited. Holding back on loan guarantees is one possibility, but it was tried in 1991 and was incredibly difficult politically, and anyway the US in July approved loan guarantees to Israel until 2011. Offsets have been used before, and as this article points out, there is a case for their use in defence contracts as a means of applying pressure.
 
But as all good politicians know (particularly one as knowledgeable about US politics as PM Netanyahu), all leaders only have so much political capital to expend, and it becomes a question of prioritising issues to ensure success in areas of most concern to you. Having weathered the early storm over a complete settlement freeze, Netanyahu is likely not too unhappy to see President Obama consumed in a tough domestic fight over health care reform, facing some tough decisions about troop increases and unsavoury electoral practices in an increasingly problematic Afghanistan, and dealing with post-election Iran.

Middle East peace has shifted from centre stage in the White House (if it was ever really there) and Netanyahu has been able to obfuscate the meaning of settlement freeze, while agreeing to a tripartite summit tomorrow with Presidents Obama and Abbas. He well knows that the Obama Administration needs this summit much more than Netanyahu does. With difficulties in both his domestic and foreign policy agendas, Obama will be satisfied at the moment with activity in place of progress on the Middle East peace front.

Photo by Flickr user delayed gratification, used under a Creative Commons license.