The U.S. National Intelligence Estimate's assertion that Iran currently does not have a nuclear weapons programme has caused much frustration in Israel. Deputy Defence Minister Ephraim Sneh referred to the report as a lie at a recent breakfast in New York, and Infrastructure Minister Binyamin Ben-Eliezer reportedly "doesn't buy" its findings.

Though the report aggravates Israel's effort to compel Washington to pursue an increasingly harsh line against Tehran, all is not lost for Israel. In fact, despite these initial knee-jerk reactions, the NIE may very well end up being a blessing in disguise for the Jewish state by pulling Israel out of its state of paralysis vis-à-vis Iran.

Israel has long been at odds with Washington's intelligence agencies. It started sounding the alarm bells on Iran's nuclear programme back in 1991, arguing that in the post-Cold War world, Iran and Shiite fundamentalism were emerging as the new strategic threat to the Middle East.

The Israeli warnings were met with great scepticism and surprise within the Beltway. After all, only a few years earlier -- at a time when Iran's revolutionary fervour was still riding high -- the Israelis had gone to great lengths to bring Iran and the U.S. back on talking terms, dismissing all notions that Iran was a threat.

But Israel stuck to its guns and ever since 1992, the Jewish state has employed a bellicose rhetoric against Tehran (echoing the Islamic Republic's venomous verbal attacks on Israel) and maintained that Iran is just a few years away from the bomb.

"Remember, the Iranians are always five to seven years from the bomb," Shlomo Brom, deputy national security adviser under former Prime Minister Ehud Barak, told this analyst sarcastically during an interview for a book on Israeli-Iranian relations. "Time passes, but they're always five to seven years from the bomb."

But Israel's new and aggressive Iran policy didn't lack critics. An internal government committee concluded in the mid-1990s that Israel's harsh public position on Iran had backfired, caused Israel to unnecessarily make itself a target of Iran and made Tehran's nuclear ambitions appear as an Israeli problem, rather than being a concern of the entire international community. The Rabin-Peres government countered that its aggressive stance had pushed Washington to take on Tehran instead of striking a deal with the Iranian clergy, an argument that was well received even by the Labour government's critics.

This is precisely why NIE is so problematic for Israel's current strategy on Iran. On the one hand, Israel fears U.S.-Iran negotiations since an accommodation between Washington and Tehran most likely would entail a small-scale enrichment programme on Iranian soil. Such a development would significantly shift the balance of power against Israel. Furthermore, Iran's interest in the region would increasingly be viewed as legitimate by Washington, which in turn would exacerbate the problems with the new balance.

On the other hand, to prevent such a scenario from arising in the first place, Israel has felt the need to ring the alarm bells, create political obstacles to a U.S.-Iran dialogue and pressure Washington to keep all options open -- without making itself appear as being on the frontline against Iran.

The NIE has pulled the rug out from under Israel's feet and caused Israel to fail on both counts. The likelihood of U.S.-Iran diplomacy has grown significantly while Israel appears increasingly alone in the world, toeing a hawkish and excessive line on Iran.

But the uncompromising line on Iran was doomed to fail regardless. First, Iran has in the past two years walked through all of Israel's red lines on the nuclear issue -- without facing a robust Israeli response. Instead, the Israeli strategy has been to revise its red lines every time Iran crossed them. This has eroded Israel's credibility.

Secondly, the pressure on Iran was increasingly likely leading to either an Iranian nuclear fait accompli through negotiations with Washington or a military confrontation with Tehran, with unpredictable consequences for Israel. The dangers of war have become increasingly clear to the Jewish state. In the end, all three previous military confrontations in the region -- Afghanistan, Iraq and Lebanon -- have surprisingly ended up benefiting Iran rather than Israel.

A growing number of people in Israel have recognised the folly of its Iran policy. The chessboard has changed but Israel has not adjusted its policy to the new realities. Israel is on auto-pilot, pursuing a policy which ignores the new strategic fundamentals -- Hezbollah's military success last year, the U.S.'s quagmire in Iraq and Iran's irreversible nuclear advances.

Israeli decision-makers have been in a state of strategic paralysis, incapable of recognising the new chessboard and the necessary adjustments they need to make. They have feared recognising publicly that Iran is a rational actor and that even a nuclear Iran wouldn't be an existential threat to the Jewish state, out of fear that such admissions would take pressure off of Washington to act firmly against Iran -- the same argument Peres and Rabin used in the mid-1990s.

Politically, this is understandable. No Israeli leader wishes to be the one to declare to the Israeli public that a critical step in the strategic rivalry with Iran has been lost, even though it was never really winnable.

But some past politicians and decision-makers have started to speak up, arguably to end the strategic paralysis and cut Israel's losses. Shlomo Ben-Ami, Israel's former foreign minister, publicly argues that a U.S.-Iran dialogue could benefit Israel. Ephraim Halevi, the former head of the Mossad, echoed in the Washington Post what he told this analyst last year -- Iran is rational, it is not suicidal, it can be deterred, Israel can handle even a nuclear Iran and a dialogue is now needed between the Jewish State and the Islamic Republic.

Noted Israeli military historian Martin van Creveld even told Newsmax last week that he "cannot think of even one case since 1980 and the Iranian Islamic Revolution that this country has behaved irrationally."

The NIE has given these voices of reason in Israel a great boost, helping them turn off the auto-pilot and ending Israel's strategic paralysis. By adjusting its Iran policy to the new strategic realities and putting its weight behind U.S.-Iran negotiations, Israel can still avoid both an Iranian nuclear weapon and a disastrous war with Iran.

Trita Parsi, author of the newly released "Treacherous Alliance: The Secret Dealings of Israel, Iran, and the U.S." (Yale), is president of the National Iranian American Council.