Israel a thorn in America's side

Obama sees these settlements as a major obstacle to a comprehensive peace agreement in the Middle East. Israel's rejection of the main plank of his foreign policy will be a test of his resolve. If he backs down on this issue, he will be seen as a weak president and America's security will be compromised.

Some US Republicans have already expressed a desire to humble Obama. Supported by AIPAC and other pro-Israel lobby groups, they can be expected to block and filibuster, in Congress and the Senate, any laws that put teeth to policies halting Israeli expansion.

The one to watch will be their reaction to the tightening of laws on private funds sent to Israel. Reuters has already identified thirteen US charities that, between them, sent US$35 million (Bt1.2 billion) to Israel for the express purpose of building illegal settlements. This backdoor funding has to stop.

In a secret audit of their own, reported by Israel's Haaretz newspaper in February, the Israeli military unit that governs the West Bank was stunned to discover that more than 75 per cent of Israeli settlements did not have building permission or had violated the terms of their permits. These buildings are therefore illegal and should, like Palestinian homes built without permission, be demolished.

But this is ignored. The Israelis simply don't want to share this land with Palestinians. Netanyahu's Likud Party and its coalition members were voted in precisely so they could be relied upon to make life more unbearable for the Palestinians.

Take for example Netanyahu's new foreign minister, Avigdor Lieberman, a former nightclub bouncer. He attempted to ban all Arab-Israeli politicians from standing in the last elections and threatened to execute anybody who attempted a dialogue with Israel's "enemies". His latest demand is that all Arab-Israelis take an oath of allegiance to the "Jewish" state. As he gets into his stride, we can expect more of these ultimatums.

Another member of the Knesset recently announced that the Palestinian homeland is Jordan, not West Bank. The resurrection of this old canard brought howls of indignation from the Hashemite Kingdom, who saw this as a breach of the peace treaty the two countries signed in 1994. But it fits the larger picture.

In December, Zipi Livni, the then-Israeli foreign minister, said if a two-state solution was reached, the Arab-Israelis, who are Israeli citizens, albeit second-class, will be removed from Israel to the new Palestinian state. She also let slip in Newsweek last June that Likud had yet to give up its territorial claims on another sovereign country, Jordan.

There are a number of different permutations as to how this may all work out. Though one thing is for sure - Israeli expansion is alive and well, and ethnic cleansing is a distinct possibility. What feeds this destructive behaviour is the $8 billion of US aid every year. This must end.

For the Americans, the Middle East is of immense strategic importance, primarily because of oil, not its relationship with Israel. This focus on oil has blinded the US to the democratic deficit they have run up since the end of the Cold War. But now a new strategic threat looms - China.

The Middle Kingdom is undergoing a massive industrial revolution and is sucking up resources from all over the planet. Its own recent stimulus package has seen Brazil and South Africa re-emerge rapidly from the global recession as a result of their trade with China. Now, when the US sneezes not everyone catches a cold.

However, the dependency on overseas commodities makes China vulnerable to the disruption of its trade routes. This is why they have contributed to the anti-piracy patrols off Somalia. They have also taken other measures, including the construction of a navy.

The recent success of the Sri Lankans in overcoming the Tamil Tigers is in part due to financial aid from China. Some of this has been earmarked to build a deep-water port in Colombo to complement the one being built in Gwador, Pakistan. This will extend the range of the Chinese Navy's capabilities into the Persian Gulf, making the Middle East of vital interest to China, for the same reason it is for the US - oil.

China will enter the Middle East as a viable competitor to the West in terms of the large, long-term contracts it is prepared to sign. This will give it considerable leverage. And if it pleases, it could nurture the long-held grievances in the region against the West to everyone's grave disadvantage. The bad feelings in the region are an exponential consequence of Iraq, Afghanistan, threats against Iran, but most of all because of the US's unconditional support of Israel.

A United States under Obama must look ahead and match its game plan to the rise of China. The goal is not to deny China a place commensurate with its power and prestige, but to make sure that the US performance entitles it to remain there too. The present financial crisis suggests weaknesses in the capitalist model that might undermine this goal.

This means pre-emptive action on two fronts. The first is a complete overhaul of US foreign policy, which is one reason why we are witnessing a hard line with Israel. The US must reconnect with the Muslim world, especially in the Middle East, and Obama's recent speech in Cairo has gone some way toward this. It also means a recommitment to democracy everywhere - on local, not American, terms.

The second plan of action is financial. To support the injection of trillions of dollars into the economy to avoid stagnation, there will have to be cuts in US spending. A big slice of this will come from the military budget, but only if soft power reduces conflict. However, if major US giants like General Motors go to the wall, then Israel can say goodbye to every last cent of its $8-billion aid package. It will have to make its own decisions about the long-term economic viability of the settlements.

Obama is therefore right to demand that Netanyahu put an end to settlement expansion. He is right to demand that a two-state solution emerge in two years. He is also right to speak to the Muslim and wider world and offer them a more equitable relationship.

The geo-political game is changing and Israel will have to change too. It will have to give up its territorial plans for a Greater Israel, end the occupation and return to the pre-1967 borders. If not, it will become a major impediment to America's own long-term chances of surviving as a great power.

This will not be tolerated. It is Netanyahu who is going to have to budge on settlements, not Obama.