As a speech, it targeted headline writers with perfect accuracy. The words “Netanyahu”, “Palestinian” and “state” duly appeared in the same sentence, without the word “not”. But nothing in Sunday’s speech by Israel’s prime minister, Benjamin Netanyahu, suggests he believes that freedom for the Palestinians, in their own state, on their own land, is the key to peace and the long-term security of Israelis.

Mr Netanyahu was replying to Barack Obama’s trenchant speech in Cairo on June 4, when the US president said that “just as Israel’s right to exist cannot be denied, neither can Palestine’s”. Mr Obama also said the US would “not accept the legitimacy of continued Israeli settlements” in the occupied territories.

The Israeli premier, who has dedicated his political life to thwarting a Palestinian state and to the cause of a Greater Israel, needed to address this alarming turn in US policy, while reassuring the irredentist and religious right on which he depends.

His utterance of the word “state” looks a purely semantic concession, so hedged by sovereign limitations as to be vitiated of meaning. Israel would have the same control over the West Bank as it now has over Gaza. Palestinians would get supra-municipal rule.

The settlements would stay and Israel would keep Arab east Jerusalem. Mr Netanyahu also set a new bar for the Palestinians: recognition of Israel as “nation state of the Jewish people”. This “Jewish state” demand evades the question of where the frontiers of Israel end and would also appear to pre-empt any negotiation of the “right of return” of Palestinian refugees.

Netanyahu watchers like to point out that though he last came to office in opposition to the Oslo peace accords he was nevertheless forced to accept them. Yet, with the exception of a partial withdrawal from the city of Hebron, he did not honour his agreements: the Wye Plantation deal whereby Israel was to return a further 13 per cent of the West Bank was never implemented. He turned the drive for peace into pure process, piling up unresolved disputes to be parked in “final status” negotiations he never intended to begin.

Mr Netanyahu will probably now give up settler “outposts” – pawns on the political chessboard – to try to isolate Mr Obama from his support in Congress. A clash looks inevitable. Yet past Israeli leaders who endangered the unique alliance with the US, Israel’s protector and patron, got punished by public opinion and voters. This is shaping up as an epic test of wills.