WASHINGTON (IPS) — While Israeli officials claimed a major win in U.S. President Barack Obama’s decision to shelve his long-held demand for a freeze on Israeli settlements on the West Bank and East Jerusalem, some analysts here believe it may yet prove a Pyrrhic victory for the hard-line government of Prime Minister Benjamin Netanyahu.

U.S. President Barack Obama (C) watches as Israeli Prime Minister Benjamin Netanyahu (L) and Palestinian President Mahmoud Abbas shake hands during a trilateral meeting in New York September 22, 2009. Obama, making his most direct foray into Middle East diplomacy, on Tuesday called Israelis and Palestinians to act with a sense of urgency to get formal peace negotiations back on track. REUTERS/Kevin Lamarque

The decision, announced at the trilateral meeting between Obama, Netanyahu and Palestinian Authority (PA) President Mahmoud Abbas in New York City Tuesday, puts an apparent end to a seven-month effort by the U.S. administration — strongly resisted by Netanyahu — to gain Israel’s agreement to freeze settlement activity as the first step toward a renewed peace process.
But the frustration and impatience expressed by Obama before the meeting, as well as his apparent determination to launch permanent-status talks between the Israelis and the Palestinians in the very near future, suggest that the White House has decided to focus its efforts and engage directly on the terms of a final peace agreement.

“It is past time to talk about starting negotiations; it is time to start moving forward,” Obama declared Tuesday.

“Permanent status negotiations must begin – and begin soon,” he said, adding that he had asked Netanyahu and Abbas to send delegations to Washington next week to meet with his special Mideast envoy, former Sen. George Mitchell, to begin laying out the terms of reference on which they were prepared to negotiate.

He also said Secretary of State Hillary Clinton would report back on the status of the talks by mid-October.

On Wednesday, Obama sounded both more specific and more determined. “The time has come to re-launch negotiations – without preconditions — that address the permanent-status issues: security for Israelis and Palestinians; borders, refugees, and Jerusalem,” he told the U.N. General Assembly, noting that Washington still “does not accept the legitimacy of continued Israeli settlements.”

“The goal is clear: two states living side by side in peace and security – a Jewish State of Israel, with true security for all Israelis; and a viable, independent Palestinian state with contiguous territory that ends the occupation that began in 1967, and realizes the potential of the Palestinian people,” he said, pledging, “I will not waver in my pursuit of peace.”

The impasse on the settlements issue and its de-linking from permanent-status talks was taken by most analysts here as a clear victory for Netanyahu and a major defeat both for the Palestinians, who have insisted on a freeze as a precondition for entering into final-status talks since Obama first demanded an end to settlement construction last spring, as well as a setback for the U.S. administration itself.

“Netanyahu 1, and Abbas, Obama and the Israeli-Palestinian peace process, zero,” Aaron David Miller, a former U.S. peace negotiator now at the Woodrow Wilson International Centre here, told McClatchy Newspapers Tuesday in a concise summary of his analysis of Tuesday’s meeting.

“You have the Israelis crowing and the Palestinians looking humiliated in the face of hardliners, “said James Zogby, president of the Arab American Institute (AAI).

“That’s not a good place to be. We’re now in a somewhat more difficult situation than we were before these discussions began,” he added.

Indeed, while the Israeli prime minister Tuesday insisted that he was ready to take part in such talks, some analysts here noted that Netanyahu has felt more comfortable dealing with so-called “interim” issues, such as settlements and other confidence-building measures (CBMs), in part because he could count on the support of his right-wing coalition and even the broader Israeli public which, according to recent polls, has become increasingly hostile toward Obama.

“Netanyahu’s preferred approach was to focus on interim issues and CBMs and to avoid negotiating the core issues on which his positions are the most unreasonable,” according to Daniel Levy, a former Israeli peace negotiatior currently based at the New America Foundation (NAF).

By de-linking settlements – even while continuing to denounce their construction as illegitimate – Obama, in a kind of diplomatic jujitsu, will now force Netanyahu to deal with final-status issues that, among other things, will challenge his ability to maintain his coalition.

“What we have been witnessing thus far… has been a table-setting exercise,” Levy wrote on Foreignpolicy.com.

He argued that the impasse reached after months of effort in gaining a settlement freeze may be part of a “more sophisticated strategy” that will ultimately lead to the “presentation and active promotion, at the appropriate moment, of an American plan for implementing a comprehensive peace” in light of the long-standing inability of the two sides to reach one themselves.

Other analysts disagreed with that analysis, insisting that the administration, even as it has raised the stakes on the urgency of reaching a final peace accord, has not yet made clear how hard it is willing to push Netanyahu, in particular, toward serious negotiations.

“It is quite clear from Round One that Obama underestimated the tenacity of Netanyahu, and the administration did not seem to have thought through what they would do if they didn’t get the cooperation they wanted (on settlements),” said Stephen Walt, an international relations professor at Harvard University and co-author of the “Israel Lobby”.

“If you can’t get Bibi to agree to a temporary freeze, how does one possibly imagine getting him to agree to 1) borders that would establish a viable Palestinian state; 2) a Palestinian capital in East Jerusalem; 3) some formula for the Temple Mount; 4) an agreement on refugees; and 5) the withdrawal of the settlers outside the wall?” he added.

For his part, Zogby believes the administration should have simply demanded a settlement freeze instead of negotiating the precise terms over its scope and duration – as Mitchell tried to do over the last several months – and gone directly to final-status talks from the outset.

But he did not exclude the possibility of a larger strategy at work, noting Mitchell’s proven skills as a negotiator in Northern Ireland. “The de-linking of settlements from final status could be a change in tack, or it could be simply salvaging a really bad situation,” Zogby said.

“I do know that Netanyahu is a master-maneuverer who uses every situation to his advantage, but I’m confident that Mitchell is quite attuned to that,” he added. “And, in any event, we’re a long way from the end of the game.”