After taking office last year, Prime Minister Benjamin Netanyahu of Israel privately told many Americans and Europeans that he was committed to and capable of peacemaking, despite the hard-line positions that he had used to get elected for a second time. Trust me, he told them. We were skeptical when we first heard that, and we’re even more skeptical now.

Map of Settlements Around Jerusalem All this week, the Obama administration had hoped Mr. Netanyahu would give it something to work with, a way to resolve the poisonous contretemps over Jerusalem and to finally restart Israeli-Palestinian peace talks. It would have been a relief if they had succeeded. Serious negotiations on a two-state solution are in all their interests. And the challenges the United States and Israel face — especially Iran’s nuclear program — are too great for the leaders not to have a close working relationship.

But after a cabinet meeting on Friday, Mr. Netanyahu and his right-wing government still insisted that they would not change their policy of building homes in the city, including East Jerusalem, which Palestinians hope to make the capital of an independent state.

President Obama made pursuing a peace deal a priority and has been understandably furious at Israel’s response. He correctly sees the Israeli-Palestinian conflict as a factor in wider regional instability.

Mr. Netanyahu’s government provoked the controversy two weeks ago when it disclosed plans for 1,600 new housing units in an ultra-orthodox neighborhood in East Jerusalem just as Vice President Joseph Biden Jr. was on a fence-mending visit and Israeli-Palestinian “proximity talks” were to begin.

Last year, Mr. Netanyahu rejected Mr. Obama’s call for a freeze on all settlement building. On Tuesday — just before Mr. Obama hosted Mr. Netanyahu at the White House — Israeli officials revealed plans to build 20 units in the Shepherd Hotel compound of East Jerusalem.

Palestinians are justifiably worried that these projects nibble away at the land available for their future state. The disputes with Israel have made Mr. Obama look weak and have given Palestinians and Arab leaders an excuse to walk away from the proximity talks (in which Mr. Obama’s Middle East envoy, George Mitchell, would shuttle between Jerusalem and Ramallah) that Washington nurtured.

Mr. Obama was right to demand that Mr. Netanyahu repair the damage. Details of their deliberately low-key White House meeting (no photos, no press, not even a joint statement afterward) have not been revealed. We hope Israel is being pressed to at least temporarily halt building in East Jerusalem as a sign of good faith. Jerusalem’s future must be decided in negotiations.

The administration should also insist that proximity talks, once begun, grapple immediately with core issues like borders and security, not incidentals. And it must ensure that the talks evolve quickly to direct negotiations — the only realistic format for an enduring agreement.

Many Israelis find Mr. Obama’s willingness to challenge Israel unsettling. We find it refreshing that he has forced public debate on issues that must be debated publicly for a peace deal to happen. He must also press Palestinians and Arab leaders just as forcefully.

Questions from Israeli hard-liners and others about his commitment to Israel’s security are misplaced. The question is whether Mr. Netanyahu is able or willing to lead his country to a peace deal. He grudgingly endorsed the two-state solution. Does he intend to get there?