In a development as dramatic as it was unexpected, Mr Netanyahu appeared to
succumb to US pressure by accepting a proposal put forward by the Obama
administration that could represent a significant step towards resuming
long-stalled peace talks.
Despite having engaged President Barack Obama in a very public argument on the
very same point in May, Mr Netanyahu conceded for the first time that he was
prepared to accept a Palestinian state that roughly follows the 1967
ceasefire lines demarcating the West Bank and Gaza.
Until now, he has consistently rejected Palestinian demands to state how much
of the occupied West Bank he is prepared to cede under a peace deal.
The Obama administration declined to react to the report, while an official at
the State Department said it would wait until Mr Netanyahu or a senior
member of his team commented publicly on the claims.
The development will raise hopes that the peace process can be rejuvenated
after months of acrimonious stalemate. But while potentially providing
much-needed momentum, it is likely to prove more an incremental step than an
epoch-making breakthrough.
It could even be rejected flat out, and many of Mr Netanyahu's sceptics are
likely to see the offer as ruse, proposed because it is likely to prove
unacceptable to the Palestinians.
The offer was couched in terms that, for the moment, appear to cross many of
their red lines.
Although Mr Netanyahu has agreed to reopen negotiations based on the
contentious 1967 lines, thereby fulfilling one of the Palestinian
leadership's principal demands, he has demanded two uncomfortable
concessions in return for the resumption of talks.
The Palestinians would be expected to retract their application for statehood,
which is to be presented before the United Nations General Assembly next
month, an Israeli official told The Daily Telegraph.
They would also have to recognise Israel as a Jewish state, the official added.
Any withdrawal of the statehood bid is likely to prove politically costly for
Mahmoud Abbas, the president of the Palestinian Authority, who would face a
domestic backlash were he to cave in.
And while the Palestinians say they are prepared to recognise Israel as a
Jewish state once a peace deal has been signed, they insist that to do so
sooner would effectively mean having to give up on the right of return of
Palestinian refugees to their former homes in the Holy Land.
On Monday night, the Palestinians denied having received any offer from Israel
and even officials in Jerusalem appeared wary of predicting an imminent
breakthrough.
"The Palestinians have not yet accepted the offer," one said,
refusing to be drawn on whether the Palestinians had, in fact, rejected it
altogether.
Despite the appearance of deadlock, the Palestinian leadership is now likely
to come under pressure to make some kind of counter-offer and it is this
fact alone that makes yesterday's announcement highly significant.
For nearly a year, neither side has been prepared to budge, much to the
frustration of Mr Obama, who has accused them both if intransigence. Now
that the Israelis have blinked, or at least given the appearance of
blinking, the Palestinians may well feel that they have to respond in kind.
Some within Mr Abbas's inner circle are said to be looking for a face-saving
way in which to drop their statehood bid after the US Congress threatened to
cancel aid to the Palestinian Authority if they went ahead.
Yet even if they were prepared to compromise on this issue, it is hard to see
the Palestinians also agreeing to recognise Israel as a Jewish state. That
would be seen as making two concessions in exchange for one.
For his part, Mr Netanyahu, who has staked his reputation on an uncompromising
attitude to the peace process, is likely to face recriminations of his own
from the Israeli right, his traditional constituency, which will claim that
he has betrayed his principles by wilting under US pressure.
Daniel Levy, a former negotiator for the Israeli government now at the New
American Foundation, said: "The language that Netanyahu accepts is both
1967 and not 1967. He appears to show flexibility but the formula he
proposes, which has been supported by the Obama administration, shifts the
emphasis in Israel's direction to accommodate demographic changes - the
settlements."
During his visit to Washington in May, the Israeli leader was involved in an
angry contretemps with Mr Obama after his host became the first US president
publicly to propose that a Palestinian state should be based on the 1967
lines - essentially the present day West Bank and Gaza Strip, both captured
and occupied by Israel in the Six Day War that year.
Mr Obama's proposal was, in fact, only a public iteration of long standing US
policy. The president later defused some of the tension by clarifying that
the border would also be based on "mutually agreed land swaps", a
formula under which Israel would annex its larger settlements in the West
Bank in exchange for some of its own territory.
But many on the Israeli right, backed by their powerful supporters in the US,
believe that the occupation of most of the West Bank should never be ended.
To their fury, Mr Netanyahu, who only accepted the principle of a Palestinian
state for the first time in 2009, has effectively shattered their dream by
essentially accepting Mr Obama's framework, despite the storm he kicked up
while in Washington.
But even if negotiations do resume, the prime minister is likely to prove less
generous than his more centrist predecessors, who offered the Palestinians
more than 90 per cent of the West Bank during earlier negotiations.
The emergence of Mr Netanyahu's offer provided the first concrete evidence
that informal contacts between Israel and the Palestinians have been taking
place.
Formal negotiations between the two sides were suspended last September in a
row over Jewish settlement construction in the West Bank.
Mr Netanyahu's settlement policy has led to frequent spats with the US. His
relationship with the Obama administration, and particularly with Hillary
Clinton, the US secretary of state, has suffered as a result. Earlier this
year, George Mitchell, Mr Obama's special representative to the peace talks,
resigned in frustration at the lack of progress. He is understood to have
held the Israelis to be largely responsible for the impasse.
But Monday night's development suggested that the US has remained heavily
invested in the peace process. Mediation efforts are likely to have been led
by Dennis Ross, a key Middle East adviser at the State Department who is one
of the few members of the Obama administration with strong sympathies for
Israel.
