The cancellation of the visit by American envoy George Mitchell, who has been delegated to renew the diplomatic negotiations, embodies the slippery slope facing Israel during the past week. Even before completing the first year of his second term in office, Prime Minister Benjamin Netanyahu has managed to foment crises in two key strategic areas: the peace process with the Palestinians and relations with the United States.

The affair of the building plans for Jerusalem's Ramat Shlomo neighborhood, which cast a pall on U.S. Vice President Joe Biden's visited, pushed back the two-state solution. At the same time, the unnecessary snub of a friendly guest became a deep rift in the dialogue between the Israeli government and the White House.

In order to rescue the proximity talks and resolve the crisis in relations with the United States, the Obama administration has made three demands of Netanyahu: cancelling the Jerusalem District Planning and Building Committee's decision to approve for presentation building plans for Ramat Shlomo, a "significant" gesture to the Palestinians and a public statement that the indirect talks will deal with all the core issues, including Jerusalem.

Obviously, the United States expects Israel to maintain the status quo in East Jerusalem and refrain from establishing new facts on this sensitive ground. The American demands are reasonable and fair. The procedure for approving the Ramat Shlomo building plan will take five years or more; it will not come to fruition in the coming months. Netanyahu can transfer lands in Area C to the Palestinians, release prisoners and lift roadblocks.

Israeli agreement to discuss all the core issues, including Jerusalem, derives from the Oslo Accords and the road map, to which the government is committed. Even without the heavy cloud hovering over relations with the United States, an Israeli government that is really and truly interested in ending the conflict must act to strengthen the status of the Palestinian partner, avoid provocative decisions and renew talks on the core issues from the point they stopped a year and half ago.

Instead of fanning the flames with irresponsible declarations about the continuation of construction in East Jerusalem, the prime minister would do well to say yes to the American demands. Stagnation in the diplomatic process, in the shadow of a deepening crisis with our greatest ally, is a strategic threat Israel can by no means afford.