The Palestinian victory at the United Nations on November 29 has been described by the Netanyahu government as a disaster. “The Palestinians want to use the diplomatic process in order to bring about the end of the State of Israel,” Netanyahu stated three days later.Nothing could be farther from reality.

Despite the unacceptable bluster of PLO Chairman Mahmoud Abbas in introducing the resolution, and even allowing that at present both sides face a serious danger of losing control over the situation, Palestinian "non-member observer state status" may be the only positive step toward a two-state solution that maintains Israel as a Jewish and democratic state that we have witnessed in the past four years.

The true significance of the Palestinian bid for United Nations recognition of a Palestinian state is that final-status talks based on the Oslo accords have run their course and failed. By placing future Israeli-Palestinian contacts on a state-to-state basis, UN recognition could help lay the foundation for the new peace paradigm that Israelis and Palestinians desperately need.

The conventional wisdom in many parts of the world is that PM Netanyahu’s intransigent behavior has driven the Palestinians to take the international track. Netanyahu has indeed brought Palestinian "statehood" upon himself, along with international condemnation of his government's destructive response. But that hardly offers a complete explanation for this revolution in the Palestinian approach.

Of even greater significance is Abbas’ last experience in direct negotiations -- with PM Ehud Olmert in 2008. Abbas confronted the most far-reaching Israeli peace proposal ever concerning refugees and holy places, yet he rejected it because it was still far from his and his constituents’ core demands on these issues.

That made it clear that the Oslo formula of linking all final-status issues in an "end of conflict" agreement would continue to founder on these two issues. The disputes that arise from 1967 — territory, statehood, security — have proven relatively amenable to negotiation. But the differences grounded in both sides’ deeper historical narratives are the real reason for nearly 20 years of failed efforts.

As Israelis understand it, the Palestinian demand that Israel recognize the right of Palestinian refugees to return requires a tacit acknowledgement that the state of Israel was “born in sin” in 1948. And the Palestinian assertion that “there never was a temple on the Temple Mount,” and that therefore Israel has no inherent rights there, is perceived as a denial of Israel’s national, religious, and historical roots. Hence the Israeli demand to be recognized as a "Jewish state":  tit-for-tat. In this sense, it is Abbas’ intransigence on a full final status package, no less than Netanyahu’s, that brought the Palestinians to the United Nations.

No Israeli leader will acquiesce in the Palestinian "narrative" positions, and no bridging formula has proven workable. These negotiating gaps are, as Abbas himself acknowledged in 2009, “too wide.” We can bemoan our neighbors' seeming inability to accept us as we see ourselves; but we still have to find a way to live with them. Better the PLO than Hamas or an apartheid state.

Abbas has turned to the United Nations not only because the Palestinian state-building enterprise in the West Bank has proved successful in providing security and stability, but also because it is clear that Oslo-based final-status negotiations, even if they reconvene, cannot succeed in ending all claims. Yet here he and Netanyahu part company: Abbas appears genuinely to want progress toward a viable two-state solution, even if not an end of conflict; Netanyahu’s ideology, his "the world is against us" mentality, and the composition of his coalition signal intransigence.

Abbas led the Palestinians to the United Nations in the full knowledge that there he would be making the substantive concessions that his constituents do not allow him to make in bilateral talks. At the United Nations — in contrast to bilateral negotiations — Abbas accepted international determination of the 1967 borders and a Palestinian capital in Jerusalem as the defining parameters of a Palestinian state, with the refugees and holy places left to further negotiations. This corresponds, incidentally, with President Obama's priorities, too.

If we can agree on borders, security and a Palestinian capital, we emerge from the United Nations with a two-state reality and a far more manageable conflict. From herein, Abbas squares off against the prime minister of Israel as president of the territorially-defined state of Palestine with its capacity to absorb fellow Palestinian refugees and award them citizenship, rather than as chairman of the Palestine Liberation Organization with its roots in the refugee issue. The paradigm changes.

Ideally, the Palestinian request for UN recognition of a Palestinian state could have been leveraged into a win-win agreement that serves vital Israeli needs as well: Security guarantees; recognition of our capital in West Jerusalem; recalling that the UN created us as a Jewish state; an exception clause for Gaza as long as it is not under PLO rule; a commitment to negotiate everything and not appeal to international judicial bodies; provisions for territorial swaps. Now that the U.S. and Israel have missed that opportunity, the primary international challenge of the months ahead is to forge a new post-Oslo state-to-state paradigm.