Yasser Arafat was enticed to attend a meeting with Ehud Barak at Camp David during the summer of 2000 with the promise that he would not be blamed if it turned out to be a failure. It did, and he was. Last week the president of the Palestinian Authority, Mahmoud Abbas, was invited to attend a meeting with the Israeli prime minister Benjamin Netanyahu in New York without any such promise.

He was not blamed and the meeting was not a failure.

Last week’s meeting in New York dealt with both an immediate crisis and a long term strategic goal. The crisis was created by Mr Netanyahu’s refusal to budge on the total settlement freeze proposed by the US Administration and by Mr Abbas refusing to negotiate without it. Entering the trilateral meeting, the Palestinians had no expectations that the US president Barack Obama could deliver a 100 per cent freeze or even find a way out of the crisis, let alone offer a commitment and a mechanism to advance a major strategic goal.

However, Mr Obama refused to yield on his demand for a freeze. Instead, he chose to see it in the context of larger issues. He responded to Mr Netanyahu’s refusal by demanding an even more ambitious and strategic goal: the resumption of talks on final status issues, which Mr Netanyahu probably didn’t have in mind. In his speech to the UN General Assembly, Mr Obama spelt out the parameters for these negotiations: security for all, borders, refugees and Jerusalem. And to add clarity, he said the goal was to end the occupation that began in 1967 and declared settlement activity “illegitimate”.

Mr Netanyahu may have won the first round on freezing the settlements but he lost the case over their legitimacy. Moreover, the endgame is about establishing a Palestinian state, and that is very much in play. Mr Netanyahu’s commitment to a two-state solution, now twice expressed in official pronouncements, will be seriously tested in new negotiations.

While he may have temporarily blocked the quest for a freeze on settlements, he has yet to prove that his opposition was to this issue alone. Many parties have yet to be convinced that Israel is serious about ending the conflict because it thinks that it has an inexhaustible base of American support, even if it takes positions that are not aligned with the US national interest.

However, the strategic commitment by the US to Israel does not extend to its occupation of Palestinian land. Mr Obama has made it unmistakably clear that the two-state policy is a real goal and that he is ready to take political risks to make it happen.

The Palestinians know that they cannot afford to lose the support of the American president, especially since he has called for immediate negotiations on all of the issues, including Jerusalem, deemed settlement expansion illegitimate, and invited them to work out the terms of reference. This package offers the Palestinians an acceptable way to resume negotiations.

Palestinians should continue to insist on a full settlement freeze. But to refuse to negotiate without it will simply mean that there will be no negotiations, which cannot conceivably serve Palestinian interests. Doubts about Mr Netanyahu, no matter how justified, should not lead to an impasse that the Palestinians will pay for in disproportionate measure.

When Mr Obama asks the Palestinians to put an end to incitement, they should pay attention. It is significant that he found nothing else to ask of them. Outmoded rhetoric in the Arabic media expressing dissatisfaction with the American president may score domestic political points, but may have a greater cost in damaging Palestinian diplomatic efforts.

The Israeli prime minister has defied the US president. This will have real consequences for Israel and its leadership. They may be hoping that Mr Obama’s political fortunes will sour given the many challenges his administration must confront. Perhaps they hope to garner greater support within the US political system or that the Palestinians themselves will inadvertently bail them out through their own overreaction, helping to blunt the force of US demands of Israel.

They could well lose such a wager. Mr Obama might remain popular and insistent on resolving this issue. Moreover, the American Jewish community is still solidly behind a two state solution, as are a majority of the American people. Even a slight devaluation of the strategic relationship with the United States is a risk that Israeli leaders can ill afford.

Since there is no military solution available to either party, they both must find a way to negotiate a means of living side by side in a narrow strip of land. And, since there cannot be meaningful negotiations without the active engagement of the United States, its policies and national interests will continue to be defining issues.