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There has recently been much discussion of the State of Israel’s “bleak diplomatic situation,” and a dismissal of Israel's foreign policy over the last two years as a string of failures. The declaration by a number of South American countries that they recognize a Palestinian state within the 1967 borders ostensibly proves this assertion.

Although Israel faces many serious diplomatic challenges and there have been many failures in the past two years, this assessment is both insufficiently balanced and insufficiently sensitive to Israel's complex foreign policy arena. Israel has in fact had important foreign policy achievements, some of them a result of Israel’s activities and some a result of international and regional developments. This essay focuses on Israel’s diplomatic achievements vis-à-vis the Obama administration.

The starting point of relations between the Netanyahu government and the Obama administration was inauspicious. Netanyahu’s first meeting with President Obama (May 2009) and President Obama’s speech at Cairo University (June 2009) in many ways seemed to augur a new low in bilateral relations. It appeared that the administration was seeking to ignore the understandings reached between the Sharon and Olmert governments and the Bush administration on the issue of settlements. The administration announced a goal almost impossible to achieve, the total cessation of building in the settlements, and presented it as a unilateral diktat by the United States, rather than as an objective achieved through dialogue, as is required by the relationship that has developed between Israel and the United States over the years. The demand for a total cessation of building in the territories is completely contrary to the ideological basis of the prime minister’s party and the platform on which he was elected to lead the country. Finally, the president explicitly placed the institution of the presidency and his personal prestige around the publicly announced framework for action.

Obama’s speech and his unequivocal demands of Israel seemingly gave the Netanyahu government two difficult options. The first option involved a clash with the Obama administration while the president was at the height of his power and his popularity, with all the serious risks this entailed. The second option involved accepting the president’s demand and risking the collapse of the government and new elections.

Ultimately, the Netanyahu government managed to escape these two options. It succeeded in redirecting the president’s demands into an ongoing dialogue with Middle East envoy George Mitchell. At the end of this dialogue, rules of the game were established that were rather comfortable for Israel, and were largely different from those that the Obama administration had sought to establish. First, the administration recognized, even if halfheartedly, the existence of the previous understandings between Israel and the United States on the issue of building in the territories, even though in practice, it made them irrelevant for the situation that had developed. Second, in practice the administration accepted Israel’s position that the peace process must be advanced within the framework of negotiations between the two sides, and not through imposed dictates. Third, the administration in effect accepted Israel’s position that the goals presented about the settlements should be realistic. This set of understandings and these rules of the game were not insignificant achievements for Israel in its relations with the US administration.

In the wake of the serious crisis on building permits in Jerusalem during Vice President Biden’s March 2010 visit to Israel, the Obama administration attempted to implement a similar squeeze tactic in connection with the building freeze in East Jerusalem. In this case as well, the Netanyahu government managed to redirect the administration’s firm demands to provide clear answers to a set of challenging questions into a dialogue between the two countries. At the end of the long, difficult discussion, it was made clear to the administration that Jerusalem is a red line for the State of Israel and that at least on the rhetorical level, as opposed to the practical level, Israel cannot accept a demand to freeze building in its capital. The lack of a firm counter-response from the administration to these clarifications by Israel created a de facto understanding – important from the diplomatic standpoint, and comfortable for Israel – on the issue of Jerusalem’s standing and Israel’s right to build there.

The last chapter in the dialogue between the two countries focused at first on the administration’s request/demand to freeze building in the settlements for a period of three months. In the negotiations about this request, another important principle was established in the rules of the game between Israel and the United States, namely, the understanding that the administration’s request for a continued freeze is dependent on giving Israel appropriate compensation for its agreement. Thus, the principle that had previously driven the administration – that Israel would accept the administration’s demands unilaterally and without compensation – was to a large extent overturned. Israel demanded compensation for its agreement, and when it became clear that the administration was not prepared to give this compensation, the issue of the freeze dropped off the agenda.

Over the past two years an additional understanding, very important in the US-Israel relationship, has been reinforced: recognition that there should be a clear separation between the US-Israel strategic relationship and the positions the United States takes in international organizations, and the diplomatic process leading to an agreement with the Palestinians. Despite the serious disputes and the public disagreements between the two countries regarding the peace process, the strategic connection between the two countries has been maintained, and even strengthened. Furthermore, for the past two years the United States has been meticulous about demonstrating impressive support for Israel in the face of serious attacks against it in the international arena. This is a situation that did not always exist in the past, and it undoubtedly gives expression to an important Israeli diplomatic achievement, at least for now.

Finally, in her speech at the Saban Forum, Secretary of State Clinton expressed – implicitly and overtly – the administration’s willingness to meet Israel halfway in some of the demands about the peace process. In this framework, the United States has made clear that an Israeli-Palestinian agreement must bring about a complete end to the conflict between the two sides “once and for all.” This means that the administration has accepted, even if indirectly, the prime minister’s demand that once an agreement is reached there will be no additional demands. She made clear that the administration accepts Israel’s position that the Sate of Israel is the state of the Jewish people and that the Jewish people has a religious-historical bond to the land of Israel. Finally, she recognized the need to ground an Israeli-Palestinian agreement in a comprehensive regional Arab-Israeli agreement that will also include a dimension of normalization, as Israel has demanded for years and has been emphasized by its present government.

Thus at least at this stage, the State of Israel has succeeded in maneuvering well in sensitive areas. Nonetheless, in relations between the two countries, there are still serious diplomatic disagreements and large pitfalls. The achievements by the government of Israel are still not so firmly entrenched that they cannot be undermined. They are definitely not irreversible – for example, if President Obama decided to demand that Israel give him a “deposit” with explicit and detailed clarifications about its positions on the core issues, particularly the country’s borders, the refugee issue, and the status of Jerusalem. This is definitely a reasonable possibility, and the government of Israel would do well to prepare for it as soon as possible.