Say this for Benjamin Netanyahu: he’s not short on chutzpah. He may be the leader of a country whose occupation of conquered territory has put it on the wrong side of UN resolutions for the past 42 years – and was accused of war crimes in a UN human rights report just this month – but that didn’t stop him from sticking a finger in the eye of a US president trying to broker an end to the Middle East’s most toxic conflict, or from rounding on members of the UN General Assembly who dared sit through a vicious speech by the Iranian president Mahmoud Ahmadinejad. “Have you no shame?” Mr Netanyahu thundered.

The Israeli leader was hardly innocent of shamelessness, as he blamed the Palestinians’ plight on their own rejectionism and on Iran. But Mr Netanyahu was enabled by Mr Ahmadinejad, whose bizarre obsession with denying the Nazi Holocaust – as if this somehow helps the Palestinians – teed up the Israeli prime minister for an emphatic riposte in which he waved original German documents attesting to the mass slaughter of Jews during the Second World War.

But Mr Ahmadinejad battling Mr Netanyahu over the Holocaust is a red herring. The UN, from its very inception, accepted the truth of the genocide inflicted on Europe’s Jews, and undertook – albeit with decidedly patchy results – to prevent future genocides.

Mr Netanyahu’s purpose, of course, is to paint Iran as a reincarnation of Nazi Germany, threatening to wipe out the Jewish state with nuclear weapons. “The greatest threat facing the world today,” Netanyahu said in a speech devoted largely to Iran, “is the marriage between religious fanaticism and the weapons of mass destruction.” This from the leader of the only country in the Middle East in possession of nuclear weapons, and whose government is beholden to right-wing settlers who believe cutting down the olive trees of Palestinian farmers and seizing their lands is a holy effort.

The Israeli prime minister was on a roll, having started the week with a triumphal sense of having seen off the US president Barack Obama’s efforts to press Mr Netanyahu to halt all construction on territory occupied by Israel since 1967. Mr Netanyahu offered only a partial slowdown of construction, exempting thousands of units already approved and refusing to restrain settlement projects in occupied East Jerusalem. While he has accepted the eventuality of a Palestinian state, he has consciously set terms for such a state that no Palestinian leader could accept, and he refuses to even negotiate on such long-established final-status issues such as Jerusalem and the fate of Palestinian refugees.

And yet, there was Mr Obama last Tuesday, not only obliging the president of the Palestinian Authority Mahmoud Abbas to drop his insistence on not meeting with the Israelis before they accepted a settlement freeze, but also announcing that having failed to secure what he had identified as the key Israeli confidence-building measure, he would simply launch final-status talks.

Even though Mr Obama insisted in his own UN speech that “America does not accept the legitimacy of continued Israeli settlements”, his credibility will have suffered among Arabs whom he had encouraged in his Cairo speech last spring to make the settlement freeze a benchmark of Israel’s intentions.

Even some conservative Israeli commentators warned Mr Netanyahu against completing a victory lap. By pushing back so hard on the settlement freeze issue – which, after all, is simply a confidence building measure – the Israeli leader could potentially have fallen into a trap. Mr Obama has taken Mr Netanyahu’s argument against the settlement freeze – that the fate of the settlements will ultimately be decided on the basis of where the final borders are drawn, and that life in those settlements can’t be put on hold until then – and turned it against him. “Fine. Then let’s negotiate those final borders,” Mr Obama effectively told the Israelis last week.

The US president has in fact cracked the whip by launching immediate talks on all final status issues – including those Mr Netanyahu has insisted are not up for negotiation. He expects both sides to send delegations to Washington within the next month to begin talks, under US auspices, “that address the permanent-status issues: security for Israelis and Palestinians, borders, refugees and Jerusalem.” The goal, said Mr Obama, was the establishment of “a viable, independent Palestinian state with contiguous territory that ends the occupation that began in 1967”. And Mr Obama left no doubt that he’s in a hurry to see the matter resolved, and will expect Israel and the Palestinians to show up when summoned.

If Mr Netanyahu didn’t like a settlement freeze, he likes final-status negotiations even less. The hawkish Likud leader made his political career out of resisting the Oslo peace process, and insisted upon taking office that a final-status peace deal with the Palestinians was not his goal. Instead, he spoke of “economic peace” – the development of Palestinian business activity within the confines of the enclaves currently controlled by the Palestinian Authority. Recently his aides have pooh-poohed Mr Obama’s naivete for imagining that an end to the conflict can be negotiated.

But Mr Netanyahu has no good excuse for avoiding the talks announced by Mr Obama, unless an unexpected uptick of violence intervenes. And a resumption of negotiations will hasten the arrival of the moment of truth, when it becomes clear that Israeli and Palestinian leaders elected by and accountable to their people are unlikely to ever reach agreement among themselves over how to repartition the Holy Land. That’s when the US will have to step in, backed by the international community, and essentially prescribe a credible solution.

So, if Mr Obama’s scolding of the two sides this week translates into a programme of action that doesn’t take no for an answer, then letting go of the settlement freeze demand would look like a smart piece of political ju-jitsu. That’s a big “if”, however, because frogmarching the two sides to a viable peace agreement will require a degree of political courage that the US president has yet to display. But at least in what he promised at the UN this week, Mr Obama is actually raising the stakes on Bibi Netanyahu.

Tony Karon is a New York-based analyst and author who blogs at www.tonykaron.com