This Haaretz editorial is extremely important, and explains why Israel will react differently to the current diplomatic row with the U.S.
Israeli support for Netanyahu on the settlement issue last year was more an issue of sovereignty than actual strong support for settlements. Israelis didn't appreciate the U.S. interfering in their attempts to counterbalance the Palestinians, and hence support for the U.S. dropped. This time, however, the Israeli government has jeopardized the U.S.-Israel relationship, which is serious business. The Haaretz editorial goes so far as to say it jeopardizes Israeli national security. Most Israelis value the U.S.-Israel relationship far higher than settlements, so the reaction will likely be much stronger on Netanyahu to act. Yet Netanyahu is between a rock and a hard place. He will have to choose between the U.S.-Israel relationship and his right-wing coalition.
While one can never be sure, I doubt Netanyahu was aware of the settlement approval in advance. His reaction Friday was to call European governments about a row with the U.S. This indicates that he is seriously worried about Israel's international standing. Also, Netanyahu is a far more saavy statesman than to do something like approve settlements while the VP is in country. And to do so a week before the AIPAC conference. That the move was so sloppy indicates that the politically seasoned Netanyahu is likely not behind it.
Netanyahu's best play here is to cancel the settlement order (telling Shas and Yisrael Beiteinu that he wil re-instate it once the furor dies down). Then, to request a meeting with President Obama while he is here in Washington to make it clear that this was a unique crisis and not an indication of Israeli foreign policy. He should downplay the deal to cancel the settlement building at the AIPAC conference, telling the crowd that Israel requires the security settlements (allegedly) provide, but that a few houses are not worth the U.S.-Israel relationship. The U.S. probably won't go so far as to force Netanyahu to make Eli Yishai resign, but they will likely try to use diplomatic pressure to fracture Netanyahu's right wing coalition.
Speaking of AIPAC, it will be interesting to see how this poorly-timed diplomatic row plays out. So far, leaders in the U.S. Jewish community seem to be unable to place significant blame on the Israeli government. Now that Secretary of State Hillary Clinton and President Obama have spoken out on the incident, Abe Foxman of the ADL says State Dept. spokesman P.J. Crowley was harsh in saying that the incident “undermined trust and confidence in the peace process, and in America’s interests." Yet that's exactly what happened. Furthermore, it happened for no fault of the U.S. government. VP Biden spent American tax dollars to visit Israel for the express purpose of mending the U.S.-Israel relationship, only to be slapped in the face. It is more than fair to say this undermines trust and confidence in America's interests.
Foxman goes on in the article to call on the government to avoid such "pitfalls," as if slapping the Vice President of the United States in the face were a mere "drawback" to U.S.-Israel relations.
However, it is the ZOA that misconstrues the situation even more, saying "Why is it that the one ally we have in that part of the world [Israel], that we have the right to publicly chastise them? We would not do that with any other friend." Firstly, it was Israel that publicly humiliated the United States, not the other way around. And secondly, in the past 3 years the U.S. has publicly chastised Syria, as well as Egypt, and Saudi Arabia (both U.S. allies in the Middle East). ZOA is dead wrong. This is yet another example of a double standard constructed on ignorance and willful blindness to the facts contradicting the foregone conclusion.
As depressing as the situation is, what ought to give policymakers hope is that in reality, the U.S.-Israel relationship is too important to jeopardize over a diplomatic spat. But a relationship takes two states that respect each other's support rather than demanding it.