In still another sign of the rapidly deteriorating relations between Israel and the US – a function of the Obama administration’s unwarranted and shocking overreaction to the Ramat Shlomo dispute – special Mideast envoy George Mitchell postponed his arrival here, originally slated for Tuesday.

Although US diplomatic sources in Tel Aviv attributed the delay to “logistical reasons” – namely Mitchell’s participation Thursday in a Moscow meeting of the Middle East Quartet – The Washington Post reported that the trip was “on hold” until Netanyahu agreed to cancel the 1,600-unit Ramat Shlomo building project.

Reportedly, US Secretary of State Hillary Clinton also wants a halt to all Jewish building in eastern Jerusalem; a substantive gesture to the Palestinians, such as a prisoner release; and peace talks that encompass not only borders, but final-status issues such as refugees and Jerusalem.

Faced with the “settlements or us” choice being heavy-handedly forced on Israel right now by the Obama administration, Netanyahu’s only option is to show flexibility without endangering his democratically elected government coalition and Israel’s most critical interests. Nurturing ties with the US is one such vital Israeli interest, especially as Iran draws closer to nuclear capability and continues to back radical Islamic terrorism.

True, it is politically untenable for Netanyahu to declare a building freeze in Jerusalem. There is an overwhelming Israeli consensus that neighborhoods such as French Hill, Ramat Eshkol, Neveh Ya’acov, Ramat Shlomo, Ramot and Armon Hanatziv, which are technically over the Green Line, are nevertheless considered an integral, non-negotiable part of Israel. However, Netanyahu could send out a subtle message to the Americans – as he did Monday during a speech to the Knesset – that Israel would refrain right now from making new pledges to build in east Jerusalem. The prime minister could also agree to negotiate a limited prisoner release, in accordance with essential security concerns, and confirm his willingness to discuss all final-status issues without preconditions.

In short, concrete efforts can be made to foster goodwill with the US while respecting both key Israeli needs and an Israeli public that brought this Likud-led government to power.

THESE CONFIDENCE-BUILDING steps are important at a time when the US is busy assembling an international coalition against Iran. Erroneously, some in the Obama administration have come to regard the success of the campaign against Iran’s nuclear program as linked to progress in the Israeli-Palestinian peace talks, instead of emphasizing the need to stop Iran, and Iranian support for Hamas and Hizbullah, as a means of advancing moderation and ultimately peace. As a result, the support of Muslim states for sanctions against Iran is seen as conditional on US-backed Israel’s willingness to make painful concessions to the Palestinians.

Even more troubling is the pernicious linkage being made now in some quarters between the Israeli-Palestinian peace process and the lives of US soldiers fighting radical Islam. According to a report in Foreign Policy by Mark Perry, a Middle East analyst and former adviser to Yasser Arafat, the startling and unpredicted meltdown in US-Israeli relations did not start in Jerusalem last week. It began in January, when the top US commander in the Middle East, Gen. David Petraeus, disturbed by Arab perceptions of America’s weakness, told the Joint Chiefs of Staff that the US’s failure to solve the Israeli-Palestinian conflict endangered US troops in the Middle East.

This would seem to explain a Yediot Aharonot report that US Vice President Joe Biden told Netanyahu after the Ramat Shlomo fiasco broke, “This is starting to get dangerous for us. What you’re doing here undermines the security of our troops who are fighting in Iraq, Afghanistan and Pakistan. That endangers us, and it endangers regional peace.” New York Times columnist Thomas Friedman made an identical argument in a piece highly critical of Netanyahu, titled “Driving drunk in Jerusalem.”

IF SOME in the Obama administration truly give credence to this claim, Israel must urgently do everything in its power to convince it otherwise. At the same time, however, regardless of the reason, the Obama administration is going to great lengths to get across a clear message that Israel faces a fateful choice: either endanger relations with the US by building homes for Jews in the West Bank and east Jerusalem and by showing insincerity in declarations of support for a two-state solution, or bolster a partnership with the US by creating a climate conducive to negotiated progress with the Palestinians, the better to ensure an effective response to the Iranian threat.

However unpalatable the choice, the path ahead for Netanyahu is, as outlined above, obvious.