During long, personal conversations with his inner circle over the past week, Prime Minister Benjamin Netanyahu admitted that he had no idea what U.S. President Barack Obama would say in his speech in Cairo. "We have no information," he said. He does now.

Netanyahu now understands what he already knew before the speech: The moment of political reckoning that he so feared is now rapidly approaching. The thunder he hears in the distance is the sound of the Likud legions and the West Bank settler hordes rolling down the mountains. The light on the horizon is not that of a new day, but of a train coming right at him - a night train from Cairo.

Netanyahu will have to decide over the coming weeks whom he would rather pick a fight with: the powerful U.S. administration, whose president sees himself in an almost messianic role, or his own coalition and members of his party.

If he aligns himself with the coalition, he will keep his job but risk isolating Israel. The alternative would elevate him to the position of a national leader who puts the nation's interests above his personal ones, but it might destabilize his rightist coalition. On the other hand, one must remember that two of his governing partners, Shas and Yisrael Beiteinu, also sat in former prime minister Ehud Olmert's coalition, which sanctified the two-state solution.

At the moment, Netanyahu is not signaling that he plans a showdown with the illegal West Bank outposts. He cannot even bring himself to utter the words "two-state solution." He seems petrified by party hard-liners like Benny Begin and Moshe Ya'alon. Maybe he is really scared, or maybe this is just a game of pretend, so he can pin the blame on them.

When he formed his coalition, Netanyahu gambled on bringing the Labor Party into his government. "Those who dare, win," he quoted, explaining his decision to invite the left-leaning party into his right-leaning coalition despite the hefty price. But when it comes to diplomacy, the prime minister is not one to dare. He digs in.

Netanyahu has three options. None of them would be easy, but he did not run for office because it was an easy job.

First, he could announce his support for a two-state solution, evacuate the illegal outposts and freeze construction in isolated settlements. That would incur the wrath of hard-liners within Likud and might cause Habayit Hayehudi to resign from his coalition, but he would survive for now.

Second, he could go back to square one and form a new coalition with Kadima. But the political price he would pay in surrendering to the demands of Kadima chairwoman Tzipi Livni is intolerable to him.

Or, third, he could say no to Obama. And then we would all have to live with the fallout.