President Barack Obama’s Middle East speech last Thursday did not break any particularly new ground on Israeli-Palestinian peace or Washington’s basic positions on negotiations. However, Israeli Prime Minister Benjamin Netanyahu and many of his supporters reacted furiously. Why? The reasons are deeply illuminating.

There were three elements to Obama’s speech that the Israelis did not like. First, Obama reiterated the well-established idea that negotiations will be based on the 1967 borders with mutually-agreed land-swaps. Even though this has been essentially understood since UN Security Council Resolution 242 and has been clear-cut United States policy since at least 2005, Obama stated the principle more clearly than usual. The Israelis regard this, essentially, as a concession to the Palestinians for which they will no longer be able to extract anything in return.

Second, Obama explicitly outlined what has been implicit US policy for most of his administration: That the parties should work on reaching understandings on borders and security first, and base progress on other permanent-status issues on those agreements.

Neither side seems particularly comfortable with this formula, which might defuse the settlement issue but also make reciprocal compromises on deeper, more existential problems like Jerusalem and refugees more complicated. To work, it will also mean instituting an informal understanding based on the Clinton parameters limiting Israeli settlement activity in occupied East Jerusalem to Jewish areas, something Netanyahu and his allies deeply oppose.

Third, Obama did not rule out dealing with, and possibly even providing aid to, a new Palestinian government arising from the Hamas-Fatah agreement. He said the agreement raised “profound and legitimate questions” for which the Palestinians would have to provide a “credible answer.” However, he didn’t adopt the Israeli line that no dealings with any such unity government would be acceptable.

There was a good deal to irk the Palestinians as well, especially Obama’s strong statement against any efforts next September to seek United Nations recognition for a Palestinian state. However, the plainly infuriated response by Netanyahu and his supporters seemed completely disproportionate to the substance of Obama’s remarks.

There are two factors informing this strong overreaction. First, and most important, is the Israeli sense that while Israel can deal with the Palestinians from a position of overwhelming strength and effectively impose any reality on them, at the international level the walls on Israel’s maximalist ambitions are closing in.

Obama’s speech is best read in contrast to Netanyahu’s speech the previous Monday before the Knesset. The Israeli prime minister ruled out negotiations on Jerusalem, spoke of annexing settlement blocs, and demanded a long-term Israeli military presence along the Jordan River. These positions are incompatible with not only international and American expectations about the nature of a two-state solution, but also American national interests and the vision of peace laid out in Obama’s subsequent speeches.

The American foreign policy, intelligence and military establishment has finally concluded that the creation of a Palestinian state and an end to the occupation that began in 1967 is essential for the United States to successfully pursue its other interests in the Arab world and, indeed, other parts of the Islamic world. This rethinking was mainly prompted by the problematic wars in Iraq and Afghanistan and has only been reinforced by the “Arab Spring.”

In this context, Obama warned Israel that “there is an impatience with the peace process, or the absence of one not just in the Arab world” but “already manifesting itself in capitals around the world.”

The Israelis appeared more pleased with Obama’s address to the AIPAC convention this past weekend, in which he highlighted Washington’s support for Israel but also reiterated all his basic positions. However, last week’s events greatly strengthened Israel’s sense of being isolated not only internationally but also from the US with regard to its vision of the future. It might hope to impose unreasonable conditions on Palestinians, but cannot hope to do so on the world, especially on the Americans. This explains the hint of panic in the Israeli reaction to Obama’s unsurprising, reasonable, carefully-crafted remarks.

Netanyahu and his allies are fundamentally uncomfortable with Obama and would prefer to see a Republican in the White House after the 2012 US presidential election. The enraged Israeli reaction was an invitation to Republican hopefuls such as Tim Pawlenty and Mitt Romney to issue strong denunciations of the president’s remarks, which they immediately did. Even after the AIPAC speech, some of Netanyahu’s supporters are continuing to issue dark warnings to Jewish Americans that a second term for Obama would be disastrous for Israel.

So, while there was genuinely visceral anxiety among those like Netanyahu that Obama’s speech reinforced Israel’s international isolation on the future of the occupied territories, there was also a degree of politically-calculated histrionics aimed at helping Republicans in their effort to unseat the president in 2012.

What Netanyahu and his supporters are failing to understand, however, is that Obama’s remarks do not reflect his personal predilections. They are based on a strong American consensus regarding US national interests, especially the need for what Secretary of State Hillary Clinton called the “inevitable” Palestinian state.

Members of Congress and Republican candidates are free to say whatever they want, since foreign policy is not their direct responsibility. But whoever ends up in the White House will have to base his or her policies on American interests, not on political calculations. Netanyahu, like any other Israeli leader, will not be able to ignore, flout or oppose these interests in the long run.