During his press conference on Saturday evening, Israeli Prime Minister Benjamin Netanyahu compared developments in the Middle East to the events of the First World War. He was speaking just hours after the dramatic removal of Israeli embassy staff in Cairo following riots by Egyptian protesters.

According to news reports from the scene, protesters managed to enter the embassy after a day of increasing anger, including destruction of a security barrier and removal of the embassy's Israeli flag. In a post-Mubarak Egypt, protesters had tapped into deep and growing discontent regarding Egypt's relationship with Israel.

In January, as the first Egyptians poured into the streets of Cairo demanding revolution, Israeli pundits and politicians quickly disparaged Egyptians' ability to manage a revolution which would usher in democratic reforms without radical Islamic leadership taking over the new Egypt.

Some commentators, invoking Orientalist stereotypes, argued that Egypt was not ready for democracy because the society would ultimately revert to radicalism.

Israel's policy on the Egyptian revolution, like America's, was supportive as long as the new regime understood the western-enforced contours of Israeli-Egyptian relations.

However, the immediate cause of the rage unleashed on the Israeli embassy last week was not the lack of Israeli support for the Egyptian revolution. Fresh in the minds of the protesters was Israel's accidental killing of five Egyptian border guards during a fire fight between Israeli soldiers and militants who had attacked Israeli civilian and military targets in the south of Israel last month.

Israel never fully apologised for the deaths of the Egyptian security personnel. Israeli Defence Minister Ehud Barak was willing to express regret but not to actually apologise for the deaths.

For Israelis, the attack on their embassy in Cairo could not have come at a worse time for their regional position, as Turkish-Israeli relations have also reached their lowest point.

In the last two weeks, Turkey has announced a downgrade of relations over Israel's failure to apologise for the 2010 flotilla raid that killed nine. In turn, Israel's Foreign Minister Avigdor Lieberman fired back with a proposed Israeli arms shipment to the Kurdish Workers Party (PKK), a terrorist organisation responsible for a number of terror attacks on civilians and a member of the US terror watch list.

As long as Israel is unwilling to issue formal apologies, its options for mending relations with Turkey and Egypt are limited. The Israeli reaction to the Eilat attacks, in which nine Israelis were killed, is an important indication as to how Israel could respond to a further meltdown of regional relations.

Within hours of the Eilat attack, Israel F-16s began air strikes on the Gaza Strip, killing at least 15 people including senior members of the Popular Resistance Committees.

But Israel failed to provide any justification for these attacks and as time went on it became increasingly clear that those responsible for the Eilat terror attack came not from Gaza but from Egypt.

Israel has yet to fully explain why Gaza was the target for retaliation. It is clear, however, that Egyptian-Israeli tension, especially violent tension, can lead to harsh Israeli retaliation against Palestinians.

It cannot be said conclusively that the exit of the Israeli ambassador from Egypt will push Mr Netanyahu's government towards more attacks against Palestinians, but it seems probable given the upcoming Palestinian statehood bid at the United Nations.

In addition to attacking Palestinians using the rationale of quelling political unrest ahead of the statehood bid, Mr Netanyahu's government is using regional turbulence to steal attention from internal issues. The tent protests - a grass-roots movement that has shaken Israeli society this summer - represents a formidable challenge to Mr Netanyahu. Protesters are calling explicitly for his removal from office.

But since Israel-Turkish relations collapsed, the movement has all but left the Israeli headlines it occupied for much of the summer.

Mr Netanyahu is leading a foreign policy that will isolate Israel, in the region and the world, in profound new ways. His ineptitude at sensitive relationships with key allies, most visible in outlandish comments from his foreign minister and his defence minister's policies towards Palestinians, reached a crisis point last week in Cairo.

If there was ever a time for Israel to express humble caution, this is that time.

But instead of reformulating policy to mend relations, Mr Netanyahu has portrayed events as existential threats, rallying the public away from legitimate social demands and behind a policy of arrogance reliant on the exploitation of fear.

After a summer of unprecedented protests and with the Palestinians about to demand a state at the United Nations, nothing short of a sustained conflict - the realisation of his attempts to exploit fear among the Israeli public - can save Netanyahu's government from collapse.

Joseph Dana is a journalist based in Ramallah