By IPS Correspondents
JERUSALEM, Jan 11 2010 (IPS)

In the past, whenever there was even a semblance of pressure from Washington on Israel, nerves in Jerusalem went all a-jangle.

Nine months ago, true to form, tensions rose appreciably when then new U.S. President, Barack Obama, and then new Israeli leader, Benjamin Netanyahu, clashed at the White House.

Not so now.

The hint that new U.S. pressure might be on the way began with a report that White House Chief of Staff Rahm Emanuel recently told an Israeli diplomat that the U.S. is “fed up” with lack of progress back to the negotiating table, and warned that Washington was contemplating scaling back its involvement in peace efforts.

Emanuel reportedly said the U.S. was “sick and tired” of Israel “stalling” and being ready to adopt U.S. ideas only when they could no longer be effective.

It continued during an extensive PBS interview on Friday with Senator George Mitchell. Obama’s special Mideast envoy held out the possibility that, in the event of its peace policy being thwarted, the Administration might resort to withholding financial loan guarantees to Israel.

It harks back to the days when James Baker as secretary of state under president George Bush I, first threatened to turn the U.S. back on a recalcitrant Israel, then applied naked pressure by conditioning massive loan guarantees on Israel agreeing to attend the inaugural Middle East peace summit in Madrid in1991.

It worked. Israel caved in.

This week as Mitchell again sets out for the region, he hears Israel is in a strangely relaxed mood, basking in the unseasonable winter sunshine as if no icy winds were about to blow in from either Washington or Europe.

“I went through the entire transcript twice, and there’s not even a hint of pressure,” Dan Meridor, a senior member of Benjamin Netanyahu’s cabinet, dismissed Mitchell’s 50-minute PBS interview.

Finance minister Yuval Steinitz said matter-of-factly, “actually, the U.S. and Israel renewed our loan guarantees agreement only two months ago. Anyway, we’re not planning to use them any time in the new future.” Steinitz referred to the comment of the Governor of the Bank of Israel, Prof. Stanley Fisher, that “the Israeli economy is not at all troubled by an unstable political climate, as some abroad assume.

“In point of fact,” Fisher told Israel Radio, “that stability has contributed to a positive investment climate, enabling Israel to weather fairly successfully the global downturn.”

In addition, two prominent U.S. senators, Joe Lieberman and John McCain who are both visiting Israel said “there is absolutely no way” that denying Israel support would pass in Congress.

So, if no real pressure is being contemplated against Israel, where is the U.S. Administration’s Mideast policy headed?

Over the weekend, U.S. Secretary of State Hillary Rodham Clinton joined Mitchell in signposting the direction of the new U.S. peace offensive.

They met at the State Department with Egypt’s Foreign Minister, Ahmad Abulgheith, and Jordan’s Foreign Minister, Nasser Judeh. Egypt and Jordan are the only two Arab countries who maintain formal diplomatic relations with Israel, and are considered crucial to moving the peace process forward.

The Secretary of State indicated that the administration has decided to try to jump-start the stalled talks by leapfrogging over the settlements issue previously pursued as central, and to focus instead on the demarcating of borders to underline the sought-after two-state solution.

According to State Department sources, the new U.S. push is expected to include the drafting of letters that set out areas to be addressed by a final accord. It is also expected to guarantee U.S. support for both sides in the implementation of a peace plan.

Reaching agreement first on the borders of a future Palestinian state would address Palestinian concerns about settlement building, Clinton insisted. “Resolving borders resolves settlements,” she said of the attempted facelift for the U.S. peace initiative.

“We need to lift our sights, and instead of…looking down at the trees, we need to look at the forest,” she said after the meetings.

For “trees” – read settlements; for “forest” – read borders.

Israel is adamant that the blame for the ongoing failure to re-start talks lies elsewhere: “Nobody has a shadow of doubt who’s responsible,” said a Netanyahu confidante, the education minister, Gideon Saar. “The Palestinians keep on raising pre-conditions. Our unprecedented willingness to impose a settlement freeze shows we’re serious.”

Saeb Erekat, the chief Palestinian negotiator, responding to the Clinton call for the resumption of talks “as soon as possible” and “without preconditions”, reiterated the Palestinian demand for an end to all Israeli settlement building continued in occupied territories.

“You cannot have discussions on borders while the territory you want to set up your state on is being eaten up by the settlements,” Erekat told IPS.

The Obama administration may not like to be reminded of the failure of its first foray into peace-making.

But while the Palestinians remain focused on hoisting the President on his own original demand for a total settlement freeze, the Jordanian foreign minister lined up with the new U.S. approach: “If you resolve the question of borders, then you automatically resolve not only settlements in Jerusalem, but you identify the nature of the ground of the two-state solution,” Judeh said.

And, last week, after a meeting between Netanyahu and Egyptian President Hosni Mubarak, the Egyptian foreign minister offered rare praise for the Israeli prime minister. “I can’t say that he has come with changed positions, but he is moving forward. Everything is on the table.”

Given the versatility in the U.S. approach – its shift from insistence on a total settlement freeze – the Palestinians now face a real risk of being themselves tagged, albeit perhaps unfairly, as responsible for Obama’s new peace tactic – of going straight into negotiations – failing again.

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