Rather than getting Israelis and Palestinians back to negotiations, President Barack Obama’s high-stakes attempt to relaunch Mideast peace talks runs the risk of cementing Israeli intransigence and exacerbating Palestinian weakness.

A day after Mr. Obama hosted the Israeli and Palestinian leaders in New York, Israeli officials boasted that they had fended off U.S. pressure to halt settlement construction. Moderate Palestinians said they felt undermined by Mr. Obama’s failure to back up his demand for a freeze — something Hamas militants were quick to exploit.

It has become clear in recent weeks that Mr. Obama has backed down on settlements after raising Palestinian hopes by saying in unusually blunt terms that all building must stop on lands the Palestinians claim for a future state.

That could seriously damage his credibility, especially in the Arab world. But it might also be a pragmatic realisation that a protracted dispute with Israel over a single issue threatened to distract attention from his wider goal of getting the sides together to start drafting a final peace deal.

Mr. Obama may have had Palestinian President Mahmoud Abbas’ predicament in mind when he outlined a tight timetable for upcoming diplomacy and chose particularly stern words to prod the sides to get serious. At one point in the three-way meeting on Tuesday, U.S. Mideast envoy George Mitchell said Mr. Obama told the two leaders: “The only reason to hold public office is to get things done.”

In a speech before the U.N. General Assembly on Wednesday, Mr. Obama renewed his call for an end to Israeli settlement activity, while also urging Palestinians to halt violence. He also called for relaunching Mideast peace talks without preconditions, words that hardline Israeli Prime Minister Benjamin Netanyahu welcomed on Thursday.

The perception that Mr. Obama has backed off on settlements was bolstered by the fact that Israel paid no price for bucking the U.S. demand — insisting on the construction of some 3,000 housing units in the West Bank — and his decision to largely sidestep the issue at Tuesday’s summit.

Despite the disappointments surrounding the summit, the reluctant handshake between Mr. Netanyahu and the weary Mr. Abbas, their first since Mr. Netanyahu took office in March, is not irrelevant. It could herald the beginning of renewed engagement.

None of that, however, could erase the impression on the ground that Mr. Obama has failed to achieve two of his most important goals announced early in his Presidency: a halt to construction in Israeli settlements, as well as reciprocal Arab gestures, such as opening up trade offices, meant to begin normalising relations with the Jewish state.

Avigdor Lieberman, Israel’s polarising Foreign Minister who has faced allegations of racism, essentially declared victory for Israel’s stance on settlement building.

“This government has shown that you don’t always need to get flustered, to surrender and give in,” Lieberman said Wednesday. “What’s important for me is that this government kept its promises to the voter ... and the fact is that this meeting (the New York summit) happened.”

The Israeli right might be celebrating a hollow victory, however, since their country’s true interests were likely served by Mr. Obama’s demand. Palestinian statehood may be the only way for Israel to survive as both a Jewish and democratic state — given that Muslims will soon outnumber Jews in the lands comprising historic Palestine. Any peace deal would require Israel to dismantle most, if not all, of its settlements.

The lack of muscle behind Mr. Obama’s settlement demand has helped create the impression that Mr. Abbas, who had been emboldened enough by the tough U.S. stance to set a settlement freeze as a condition for renewed talks, has now been left to dangle.

Mr. Abbas’ aides tried to spin the New York meeting positively. But one Palestinian government official, Ghassan Khatib, was more candid.

“I’ll be frank. There was some disappointment here in the Palestinian territories among officials and the public that might not appear on the surface, in the official reactions, probably for diplomatic reasons,” he said.

“The disappointment results from the fact that the (U.S.) administration... insisted on the meeting in spite of not making enough progress on the settlement freeze,” Mr. Khatib said. “As long as any peace process is not good enough to stop the expansion of settlements, it will not be perceived as a constructive and meaningful process.”

In the Gaza Strip, the Hamas-controlled territory that together with the West Bank is supposed to make up a future Palestinian state, Hamas spokesman Sami Abu Zuhri said his movement “condemns Mahmoud Abbas’ participation in this meeting which has damaged Palestinian interests.”

“The American administration’s failure to force the occupation to stop settlement and other violations of Palestinian rights confirms its complete bias in favour of the occupation and the danger for the Arabs of counting on the American position towards the Arab-Israeli conflict,” he added.

Hamas’ two-year-old stranglehold on Gaza has emerged as one of the leading obstacles to Palestinian statehood — and may even help explain Washington’s decision not to press too hard on settlements, since the Gaza wildcard might preclude a peace deal anyway.

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