Last week’s visit to Israel by U.S. Vice President Joe Biden was supposed to be an opportunity to iron out differences between Washington and Tel Aviv. Instead, it has led to a major crisis, which is harming relations between the Israeli government and the U.S. Administration.

News of a building development project for the construction of 1,600 houses in Ramat Shlomo – an ultraorthodox neighborhood in East Jerusalem, on the other side of the so-called Green Line – right before the dinner between Vice President Biden and the family of Israeli Prime Minister Benjamin Netanyahu, was defined by the Obama Administration as “an insult” that Tel Aviv will have to remedy.

The United States has always officially opposed the construction of Israeli neighborhoods and settlements on the other side of the Green Line, on land, which – according to the prevailing international opinion – should be a part of the future Palestinian State. The announcement of a new building plan in East Jerusalem while Vice President Biden was in Israel and the U.S. was getting ready to launch a series of indirect talks between Israelis and Palestinians was deemed to be a serious humiliation for the U.S. Vice President.

Netanyahu quickly apologized for the timing of the announcement – defined “unfortunate, out of place and inconvenient” – and stated that he had not been informed of the decision of the Israeli Interior Ministry’s building planning commission. He also added that it will take years before the project actually starts.

During a speech at Tel Aviv University, Biden, while disapproving the Israeli decision, said that he appreciated Netanyahu’s effort to water down tension. However, since then, Washington’s reaction has been mounting in intensity and there have been several statements by U.S. officials, who have defined this move by the Israeli government as being unacceptable.

The incident seems to have unleashed a diplomatic crisis between the two countries – the worst in the last 35 years, as it has been defined by Michael Oren, Israeli ambassador to the U.S. The President of the American Task Force on Palestine, Ziad Asali, has called it “something more than a storm in a tea cup, yet slightly less than a strategic crisis.”

The vast majority of analysts agree that the soundness of relations between the two countries is not at stake, but many do believe that we are witnessing a gridlock between the Obama Administration and Netanyahu’s government to set the line to be followed on two key issues: the Israeli-Palestinian peace process and the Iranian nuclear question.

Much has been debated on whether the announcement of the new building development project in East Jerusalem was actually an unintended “incident” as Netanyahu says (the Interior Ministry is led by Eli Yishai, leader of the Shas Party, who opposes negotiations with the Palestinians, and – according to some – allegedly acted on his own initiative), or whether the announcement was actually part of a strategy of the Israeli government to make negotiations fail before they even start and to challenge the White House.

Regardless of whether or not the cause of the crisis was deliberate, it is clear that the Obama Administration and the Netanyahu government were bound to collide sooner or later on the political line.

The origin of the “coldness” in relations between Washington and Tel Aviv dates back to President Obama’s speech in Cairo in June 2009 when he made a first step towards U.S. reconciliation with the Arab world, without traveling, though, to Israel to offer the Israelis reassurance.

Obama is not very popular in Israel compared to previous U.S. Presidents. Many Israelis are likening him to former President Bill Clinton, who had succeeded in supporting the positions of the Palestinians led by Yasser Arafat without ever giving rise to doubts on his genuine love for Israel and the Jewish. Obama has clearly failed in this effort owing to a series of errors his staff and he have made, both due to the change in the historical context and in the weakness of his Administration.

According to some, Biden’s visit to Israel was supposed to remedy this situation in an effort to re-establish a relationship of mutual trust. However, even more may be behind it. Clearly, the Vice President’s visit came at the height of a major U.S. diplomatic push focused on Tel Aviv. Over the past two months, CIA Director Leon Panetta, National Security Advisor Jim Jones, Deputy Secretaries of State Jim Steinberg and Jack Lew, the Chairman of the Senate Foreign Affairs Commission John Kerry, Admiral Mike Mullen, and others have traveled to Israel.

A few days before the arrival of the U.S. Vice President, the conservative Jerusalem Post newspaper published the article “Biden’s Lost Cause”. Caroline Glick wrote that the Vice President’s apparent goal was to shore up support for the Israeli Left as a possible alternative to Netanyahu. According to Glick, since all senior U.S. officials have failed in their bilateral meetings to “tame” the Israeli Prime Minister, they now presumably believe that the only way to force him to toe their line is by making him believe that the price of defiance will be his premiership. 

Biden was selected for the job because he is widely perceived as the most pro-Israel senior member of the Obama Administration.  However, according to Glick, his mission was bound to fail right from the beginning given the weakness of the U.S. Administration, Obama’s unpopularity in Israel and the difficult predicament the Israeli Left is in. For now, the outcome of the U.S. Vice President’s visit seems to be proving her right.

Anyhow, regardless of the “incident” that unleashed the crisis, the truth is that Israeli politics has been for some time now on a collision course with White House policies.

The 1,600 houses in Ramat Shlomo fall within the wider framework of 50,000 houses planned to be built in coming years in areas of Jerusalem outside the Green Line and which are currently at different stages of planning and approval. In addition, Netanyahu has defined the timing “bad”, but he has made no mention of the possibility that he may reconsider the decision.

There are also several loopholes in the temporary freeze on settlements in the West Bank. A new wave of settlements is expected at the end of the 10-month freeze ordered by the government. For decades every Israeli government has promoted settlements, and settlers and their supporters are firmly rooted in Israel’s government, administrative and security bodies.

According to many observers, all this clashes with the U.S.’s need to jump-start negotiations, which – regardless of the actual failure or success of the initiative – would help bring together Washington’s Arab allies in view of possible sanctions on Teheran.

The line to be followed with regard to Teheran is another reason for attrition between Washington and Tel Aviv. The White House’s attitude towards Iran is deemed to be hesitant and meek by the Israeli government.

The United States is in a tough spot both domestically and internationally. With a serious economic crisis to cope with and the Afghan-Pakistani and Iraqi fronts still on its hands, Washington seems to be lacking a clear strategy for Iran as well as credibility with Israel and its Arab allies.

The latter are perfectly aware that the months following the Cairo speech were months full of second thoughts for Obama, and of gradual downsizing of the goals set in that historical speech. For the Arabs, the recent affront suffered by Biden in Jerusalem confirms America’s loss of influence in the Middle East. At the same time, the White House lacks credibility in the eyes of Tel Aviv. The Netanyahu government thought it could challenge the Obama Administration right from the day it took office.

The concern that the United States is considered by its Arab allies as being increasingly incapable of delivering on its promises, and that the Israeli hard-line and the stalemate in the Israeli-Palestinian peace process are tarnishing Washington’s reputation in the region, possibly reached the Obama Administration through its top military commanders .

This might explain Washington’s harsh reaction following Biden’s humiliation during his visit to Israel. The White House can no longer take any more defiance, challenging its role in the Middle East and it is in desperate need of starting the peace process again to restore its prestige abroad and at home.

However, there are very little hopes for the future of negotiations (if they ever start), as it is easy to understand that they basically have an instrumental value for Washington. With the upcoming mid-term elections, the drop in Obama’s approval ratings and the Republican comeback at home, the White House needs an apparently thriving negotiation process to avoid acknowledging its failure, but it cannot invest too much on it.

Netanyahu is well aware of all this, he has perceived Obama’s political weakness and he is counting on his Republican friends, on the powerful pro-Israel lobby – which has the support of many members of Congress even among the Democrats – and on the “Jewish vote” at the upcoming November elections to hold the White House in check.

Up to now the Obama Administration has used harsh words with the Israeli government – demanding the revocation of the building development plan announced in recent days, and other “gestures of goodwill” by Netanyahu – but it has not mentioned any tangible threat if he were not to accept Washington’s requests.

In turn, Netanyahu has apologized for what happened, trying to play down tension, but he has shown no intention at all to repeal the decision by the commission of the Interior Ministry. If he were to accept the Administration’s requests, he would risk having to deal with an uprising of the hardliners in his government coalition and a possible domestic political crisis.

Without any tangible form of retaliation by Washington, it is rather unlikely that the Israeli Prime Minister will back down from his political positions or adopt any concrete measures. Likewise, it is just as unlikely that the Obama Administration will threaten measures against Tel Aviv and above all that it will have the political clout to enforce them.

After President Obama gave up to a total freeze on settlements in the West Bank and East Jerusalem as a precondition for resuming talks in the face of Netanyahu’s refusal, the U.S. President cannot afford to back down a second time in front of the Israeli government, but he also lacks the authority and consensus necessary to exert his will on the Israeli Prime Minister.

Obama has already been heavily criticized by the AIPAC, the powerful pro-Israeli lobby in Washington, for his “hard-line” with the Israeli ally. The Republicans, too, have joined in this criticism.

At this point, the only way out could be a “compromise solution”, which would not actually change anything. For instance, some have stated that the “head” of the Israeli Interior Minister could be adequate retribution for Obama.

However, this would not change the fact that Washington’s reputation in the Middle East would be even further tarnished, that indirect negotiations, if they ever start, are bound to fail, and finally that the Palestinian question may slip into new outbursts of violence, as the clashes and tensions in recent days seem to confirm.

In conclusion, the recent crisis may have further put off any prospects of peace to an even more remote and hazy future, and made the entire situation in the Middle East even more confused and uncertain.