The reason for canceling Thursday’s scheduled meeting in Paris between Benjamin Netanyahu and George Mitchell was simple: there was nothing for the Israeli Prime Minister and President Obama’s Middle East peace envoy to discuss.

The U.S. has demanded a complete freeze in Israeli settlement construction in territories conquered in 1967, making it a litmus test of Israel’s bona fides in pursuing the two-state solution, which the Obama Administration has prioritized.

Netanyahu, who faces more public pressure from Washington than any Israeli leader in nearly two decades, says he wants peace talks and recently declared his qualified support for a two-state solution.

But even as he makes concessions on other fronts — like easing security restrictions on the West Bank — Netanyahu insists on continuing building inside existing settlements; days before Netanyahu and Mitchell were to have met, Israel’s government approved the construction of hundreds more housing units in two West Bank settlements.

As if that wasn’t clear enough, Netanyahu this week derided the Administration’s concern over settlements as a red herring. "I think the more we spend time arguing about this, the more we waste time instead of moving towards peace,” he told an Italian TV interviewer.

All along, Netanyahu has insisted that a different Middle East crisis, Iran’s nuclear program, should be the focus of his relations with Washington.

And though the Obama Administration resisted that argument, Netanyahu may now be getting help from an unexpected quarter: the Iranian regime, whose violent crackdown on peaceful protests against election-rigging have created a more pressing foreign-policy crisis for the Obama Administration

Finding a comfort zone with a U.S. Administration determined to move quickly toward implementing a two-state solution has been difficult for a hawkish Israeli leader who is, at best, a reluctant traveler on that road.

When Netanyahu visited Washington in May, he discovered he’d been outflanked by Obama, who had managed to get many of Israel’s key congressional supporters on board with the White House push against settlements.

U.S. officials were widely quoted as telling the Israelis that moving forward on a settlement freeze and peace with the Palestinians was a critical step toward mustering the Arab support Washington needed to pressure Iran.

In his Cairo speech, Obama had made clear that America’s commitment to Israel’s security is absolute, but settlements do nothing to enhance Israel’s security, and arguably impede it as long as they obstruct the path to peace with the Palestinians.

Iran has now forced its way back to the top of the White House agenda, as a result of Tehran’s violent crackdown on its own citizens protesting claims of election fraud.

The domestic political pressure on the Administration to take a tougher stand against Iran’s regime may actually help Netanyahu resist pressure for a settlement freeze.

After all, the President may find it difficult, in Washington, to muster pressure on Israel over settlements at a moment when he’s being berated for speaking too softly on Tehran’s crackdown. Members of Congress are now proposing new sanctions legislation and even demanding hearings on U.S. policy toward Tehran.

And that’s exactly the conversation that Netanyahu wants dominating the nation’s capital.
Washington is insisting on the settlement freeze in line with the requirements of the 2003 road map for peace, and because the West Bank, Gaza and East Jerusalem are the geographic basis of the Palestinian state envisaged in the two-state solution.

As long as Israel continues settlement construction, Palestinians doubt its seriousness about agreeing to a viable Palestinian state. But Israel claims it has a right to keep building within the boundaries of its existing settlements to deal with what it calls "natural growth,” and it expects to keep the occupied land on which most are built in any peace agreement.

The founding agreements of Israel’s right-wing coalition government, however, include ongoing settlement construction, and the government includes a strong presence of settlers, including Foreign Minister Avigdor Lieberman.

Israeli news reports said the Paris meeting was called off after a discussion in Washington between U.S. officials and a Netanyahu aide confirmed that the positions of the two sides were still too far apart to warrant a meeting.

Instead, Defense Minister Ehud Barak, the most moderate leader in the ruling coalition, will fly to Washington on Monday in an effort to mediate on the settlement deadlock.

Netanyahu and Obama have made some progress on other aspects of restarting a peace process. The Israeli leader has finally accepted the idea of a Palestinian state, albeit with limited sovereignty, and he has signaled an intent to ease the Gaza blockade, remove some West Bank roadblocks, release some Palestinian prisoners and transfer more security responsibility in West Bank towns to Palestinian forces.

But in publicly and repeatedly demanding a settlement freeze, even after Israel objected, Obama has made it not only a test of Netanyahu’s bona fides as a peacemaker, but also of U.S. credibility.

The President hasn’t left himself much room for retreat; the question is whether Netanyahu plans to find a way to accommodate the President’s demand, or to defy the White House and rely on the turmoil in Iran to keep the heat off Israel.

TIME