Sometimes a defeat can be a great moral victory. For the British, Dunkirk in 1940 was such; a mass retreat before Hitler’s forces was seen as a glorious success against all the odds, shipping the troops across the Channel in an armada of small boats. For Americans, the battle of the Alamo against the Mexican Army in 1836 was a glorious defeat.

President Mahmoud Abbas’ bid for UN recognition of Palestinian statehood should be seen in the same light. It will fail because the US will veto it. But it will be a glorious failure. It will not be the Palestinians who will be perceived as having lost. It will be the US and, behind it, Israel. The Palestinians’ moral right to statehood will be embraced by most of the world, and in being embraced, reinforced. American influence in the world on the other hand, will be dealt a body blow. Washington’s political credibility with its friends will be severely damaged while the rest of the world will regard with withering contempt for its moral vacuousness. Meanwhile in the Middle East, this craven act of submission to Israel will rob the US of any chance of being a partner with the new Arab world that is emerging and which might otherwise have been its close friend.

As for the Israelis, their behavior in this affair — the crude manipulation of the American political process through the Israeli lobby to prevent UN recognition from happening, their absolute refusal to make any concessions for peace and, now, the provocatively-timed announcement of plans to build a further 1,100 homes in occupied East Jerusalem — has lost them friends and supporters around the world by the millions. Israel is more hated, more rejected, than it has ever been.

The announcement of the new homes was clearly intended to ram home to everyone that Israeli Prime Minister Benjamin Netanyahu feels he can do what he wants. It is an act of supreme arrogance. He is brazenly showing the world that he can ride roughshod over the peace process, that he can prevent the UN from recognizing Palestinian statehood, and no one can do anything about it because he has the US with its UN veto to protect him. US Secretary of State Hillary Clinton has, of course, issued the obligatory condemnation about these latest settlements; but Netanyahu knows that it is mere diplomatic hot air. He knows it is just words. When it comes to action, Washington is not there.

The settlements — most of all the expansion of settlements — are the make or break issue for the Palestinians as far as taking part in peace negotiations is concerned. Netanyahu knows this. He is using this to block the peace process.

US President Barak Obama is wholly complicit in this. He could throw down the gauntlet to Netanyahu by withholding the veto and instead agreeing to Palestinian statehood. It would send a powerful message to Israel that its intransigence over settlements must end. Instead he allows Netanyahu to walk over him.

It is in Washington that the real obstacle to Middle East peace lies. In vetoing Palestinians statehood despite having previously committed himself to it, Obama demonstrates that to the world. In doing so, he hands the Palestinians the moral victory. For the US he ensures humiliation.