The bold resolve of U.S. President Barack Obama to settle the Arab-Israeli conflict poses a clear challenge to Israel’s right-wing Prime Minister Binyamin Netanyahu. Obama’s challenge to Arab leaders is equally great: He is offering them a unique – probably never to be repeated – chance to salvage a Palestinian state from the defeats and disasters of the past six decades.

Will both sides rise to the occasion?

Obama’s determination to settle the long-running Israeli-Palestinian conflict on the basis of a two-state solution is no longer in doubt. It is a message he conveyed from the first hours of his presidency, and which he repeated with great conviction at Cairo University in his historic June 4th address.

NETANYAHU MUST EITHER CONFRONT THE SETTLERS – AS OBAMA IS ASKING – OR RISK LOSING AMERICAN SUPPORT.

America, he declared, would not turn its back on the Palestinians’ legitimate aspirations for dignity, opportunity and a state of their own. “This is why I intend to personally pursue this outcome with the patience that the task requires.” A two-state solution, he insisted, was in Israel’s interest, the Palestinians’ interest, America’s interest, and the world’s interest.

Netanyahu faces a painful dilemma. If he decides to fight Obama, he puts Israel’s lifeline to the United States at risk. But if he bends to Obama’s will, his right-wing partners will desert him and his government will fall.

In reality, the choice may not be so stark. Netanyahu will do everything to avoid an open clash. He will seek to negotiate. He will propose a compromise. He will duck and weave. He will delay by all possible means the moment of choice. And, if one or two extremist parties do defect from his coalition, he may seek to build a new coalition with Labour, and with Tzipi Livni’s centrist Kadima party.

But the basic choice will remain. Netanyahu must either confront the settlers – as Obama is, in effect, asking him to do – or give in to them, and risk losing American support. Greater Israel or peace with the entire Arab and Muslim world. The settlers or America. At the end of the day, these are the ineluctable choices Israel is called upon to make.

It may be that the United States is seeking to engineer Netanyahu’s downfall. He and his allies – the land-grabbing settlers, the fanatical rabbis, the Arab-hating racist foreign minister Avigdor Lieberman – are diehard opponents of Obama’s vision of peace and reconciliation. It is hard to see how he can arrive at any sort of compromise with them.

Perhaps Washington’s calculation is that psychological and political pressure, such as Obama is now exerting, will isolate the extremists and rally a majority of Israelis to the two-state solution. The coming months will determine whether this is possible.

Meanwhile, members of rival Palestinian factions continue to kill each other as if unaware that they are gambling with their national cause and playing straight into Netanyahu’s hands. Their infighting is their greatest gift to him. They are providing him with the perfect pretext to avoid the choice Obama is insisting on.

When will the leaders of Fatah and Hamas grasp the simple truth that if they want a Palestinian state they must now close ranks? If they cannot surmount their petty disputes, they should withdraw and make way for others, less obsessed with the personal and ideological quarrels of the past.

The responsibility of Arab leaders is now very great. They alone – and principally the leaders of Egypt, Saudi Arabia, Syria, Jordan and perhaps some Gulf States as well – have the leverage over the Palestinian factions to force them to put their disorderly house in order.

Is it too much to expect the Arab states – at this crucial moment in Obama’s presidency – to put aside their own “Cold War” disputes and call a meeting of all Palestinian factions at which a new common charter would be drafted and put before the world?

Surely Hamas can be persuaded to exchange the long-term truce it has offered Israel for a full-fledged peace? Surely it can pledge to recognize Israel once a Palestinian state is created? Surely renouncing violence – such as Obama is demanding – is no great sacrifice at this historic moment, and is perhaps the best way to persuade Israel to renounce its own violence?

The unvarnished truth is that if the Arabs want peace, and if the Palestinians want a state, they must raise their sights from their internal conflicts and give Obama – this visionary president whose appearance at the helm of America is nothing short of miraculous – the support he needs. If they think Obama can succeed without their help, they are much mistaken.

PATRICK SEALE is the author of The Struggle for Syria.