The problem with the immediate controversy over whether or not Israel will continue to suspend most expansion of its Jewish settlements in occupied Arab land is that it is both tangential and central to the Arab-Israeli conflict. This means that the principal actors – especially Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas – have much flexibility to hold their ground or make concessions, because in either case they can claim to be winners.

This is why the settlements freeze issue is largely tangential to the real diplomatic struggle between Israelis and Palestinians, and the wider Zionism versus Arabism struggle. If the settlements continue to be subjected to a slowdown order, and direct negotiations resume, Abbas and Netanyahu can both claim to have acted with statesmanship and firmness. If the building of settlements resumes to its normal expansion pace, and Abbas suspends talks, both leaders still can feel they held their ground in the face of unreasonable foes. The freezing or continuation of settlements is only a battle of political wills and wiliness – important not mainly for itself, but for what it reveals about the other dimensions of the conflict.

Also, the immediate slowdown or continuation of Jewish colonies is an exaggerated issue because Zionist settlement-building and colonial expansion in occupied land have never stopped since the birth of modern Zionism some 115 years ago. Building settlements, stealing and expropriating land, expelling indigenous Palestinian Arabs and replacing them with Jewish zealots have been four central operational principles of modern Zionism since the mid-1890s.

Settling the land is not a flexible or optional tactic that Israeli governments speed up or slow down in the same way they decide to raise or lower taxes. The “redemption” of the land that God gave the Jewish people in perpetuity, in the eyes of Zionism, is their central ideological dictate, the heart and soul of who they are as a people, the single most important act of a Zionist and of the state of the Jewish people, as Israel defines itself. So Netanyahu is being honest, for a change, when he says that settlements will continue to be built, for in fact they have never stopped being built, under any Labor, Likud or Kadima government. If settlement stops, Zionism withers, many Israelis believe.

The issue is important, though, for what it can clarify about three critical matters: the true nature of the Arab-Israeli conflict, the negotiating strength of both sides, and the mediating role the United States has defined for itself.

The first is the most important, because all the controversies and pushing-and-pulling on negotiations during recent years are proxy dynamics for the important core conflict between Zionism and Arabism: Who owns this land? Who belongs in their ancestral home? How can the two people coexist in a common or adjacent states? The big sticking points in the Arab-Israeli conflict are the rights of Palestinian refugees to repatriation, national reconstitution, statehood and compensation, versus the Israeli right to secure and recognized “Jewish statehood“ in the same land that was 95 percent Palestinian a century ago. Many Israelis want to use the settlement issue to evade addressing the refugees rights issue, while Palestinians see diplomatic firmness on settlements as their means to force the Israelis to engage more seriously on the refugees issue.

The immediate decisions on settlements will signal how the parties feel about these bigger issues, and also about the second matter above: their respective negotiating strengths and postures. In the short run – namely, the past 18 months since Barack Obama assumed the American presidency and re-invigorated Washington’s mediation – both sides can claim partial victories. However, both also made equally substantive concessions. They have used the settlements issue to bolster their negotiating postures and position themselves advantageously for the really hard discussions on the core issues of Palestinian refugee and national rights versus Jewish statehood.

Because the controversy over settlements is really a precursor of the struggle over the deeper issue of legitimate statehood and nationhood for Palestinians and Israelis, and both sides have signaled their willingness to make small concessions, the most important dynamic in the short run turns out to be the role of the external mediator: the US government, whose role has become paramount. For better or worse, all eyes will be on Obama, Secretary of State Hilary Clinton, and peace envoy George Mitchell for now to see if external mediation can generate the elusive combination of firmness, fairness and persistence needed to nudge the parties from their minor concessions towards a more serious grappling with the really tough core issues of nationhood, statehood, and, above all, sovereignty and legitimacy for both sides.

So we should keep our eyes on what happens with the settlements issue in the short run, but focus more sharply on the further horizon where the real issues and battles are yet to emerge.