This week in Israel, Vice President Joe Biden found out something that he’s probably known for quite some time: No good deed goes unpunished.

Shortly after Biden arrived in Jerusalem on Tuesday, to reassure the Israelis and coordinate efforts on Iran and other issues, Israel’s Ministry of the Interior announced the construction of 1,600 new housing units in East Jerusalem.

I’ve seen this movie before. It’s the sequel in a series that started when I was working for former Secretary of State James Baker. When Baker landed in Israel on his nine trips leading up to the 1991 Madrid peace conference, he was often welcomed with news of a new settlement.

But this was a particularly ham-fisted sequel. With one announcement, the Israelis managed to embarrass Biden, a close friend of Israel; humiliate the Palestinians, who’d just agreed to indirect talks with Israel; and call into question the credibility of those putative negotiations.

Still, with all the smoke, the question remains: Where’s the American fire? What will President Barack Obama do?

Not much, I suspect. I’ve also seen this rerun.

Neither Obama nor Prime Minister Benjamin Netanyahu has a stake in escalating this situation. Despite the upset, we’re not on the verge of an Israeli-U.S. war. But the affair does raise big questions about the Israeli government’s competency and coherence — and the degree to which Israel is willing to take into account U.S. interests.

All these factors spell trouble down the road.

The origins of the current settlements flap aren’t entirely clear. Most likely, the vice president wasn’t the only one blind-sided by the announcement.

True, the additional housing units, if not yet officially approved, have been in the works for quite a while. Also true, the prime minister — committed to building in and keeping East Jerusalem — was aware of the proposed expansion.

It seems clear, however, that Netanyahu wasn’t aware of the announcement’s timing. Either the interior minister, or officials in the ministry, willfully decided to make a point: Welcome, Mr. Vice President! Jerusalem isn’t on the table. It’s ours.

Regardless of the internal ticktock that led to the announcement, the impact was severe. The move undermined U.S. credibility in the Middle East and internationally and called into serious question the integrity of the impending proximity talks.

It managed to elicit Washington’s strongest words about Israel in years. But tough talk is one thing; action and accountability, another.

Surely, analysts say, the Obama administration will get tough. After all, its street cred is on the line in the region; the Palestinians in the Arab world are reeling, threatening to call off participation and support for the indirect talks.

But don’t bet on America hammering the Israelis. The last thing this president needs now is a fight with Israel.

Obama has no Middle East policy without the Israelis. As frustrated as the president and vice president may be with Israel, any chance Washington has of moving negotiations forward requires Israeli cooperation. And the administration does not want to lose its influence with Israel when it comes to Iran — particularly now, with sanctions in the works.

But most important, for this very busy president, the Arab-Israeli issue now has little to do with his stock at home. Frankly, it isn’t even the most important priority in the region.

Obama is presiding over two costly and unpopular wars and a jobless recovery and is on the verge of the endgame on health care. He doesn’t need additional diversions and distractions.

Moreover, Obama now knows the settlements issue is a dog’s lunch. He can’t win — particularly when it involves Jerusalem.

No, the smart money is on Obama’s keeping his powder dry, for now. Odds are that he will focus, instead, on getting the indirect talks launched, while he thinks about how to bridge the gaps on the core issues, including borders, security, refugees and, yes, Jerusalem.

The Israelis and Palestinians will, at some point, have to sit down directly. But the history of successful Arab-Israeli peacemaking demonstrates that every agreement that lasted — with the exception of the Israeli-Jordanian peace treaty — came about through U.S. mediation.

Indeed, at the right time, there may well be a fight worth having with both the Israelis and the Palestinians about a final-status agreement. If such an agreement could be achieved, this would make Obama look good and also advance Israeli and Palestinian interests.

No one ever lost money betting against Arab-Israeli peace, and Obama probably won’t, either.

But an overstretched president has to pick his fights carefully. And going after the Israelis now over the Jerusalem issue just isn’t one of them.