The Israeli government insists that a nuclear Iran is an "existential threat" and that, accordingly, it will decide for itself how to handle it.

And yet, the same Israeli government that is determined to alert the world to the dangers it believes are posed by Iran is equally determined to preserve an occupation that would spell the end of Israel's existence as a democratic Jewish state.

One can argue about whether Iran is developing nuclear weapons or would use them against Israel, knowing that doing so would be suicidal. The experts are divided on those questions.

But there is no way to argue that a democratic State of Israel can survive once it has a decisive Palestinian majority, an eventuality that is just a few years away if Israel maintains its control over the occupied territories.

Once a Palestinian majority is permanently in place, Israel would be faced with two, and only two, alternatives. It could grant the occupied Palestinians the ballot, affording them the opportunity to vote the Jewish state out of existence.

Or more likely, Israel would deny Palestinians the vote, becoming like apartheid South Africa, a state where the minority rules. Such a state would not even be able to maintain a relationship with the United States, let alone the rest of the world.

There is no third alternative. That was demonstrated this week when some leading right-wing Israelis announced that they had found one. Their alternative is that the Palestinians would be made citizens of Jordan, allowing Israel to keep the occupied land but not the people.

That idea is preposterous, of course. The position of Jordan is precarious enough without adding a few million more non-Jordanians to the population mix. Nor would the Palestinians ever accept Jordanian nationality as a substitute for their Palestinian identity. They want their state in Palestine, not Jordan. Jews should understand that. After all, their dream of Eretz Yisrael was never about Amman either.

The only reason to mention this third alternative is to demonstrate that there are really only two. That is, if Israel maintains the occupation. Both entail the end of the Zionist enterprise.

Not surprisingly, a growing number of Palestinians are coming around to the position long held by the Israeli right: allowing the occupation to go on indefinitely.

And that makes sense for anyone who wants to see the 1947 partition of Palestine rolled back. Rather than "Two States for Two Peoples" (the slogan of those like Tzipi Livni and Mahmoud Abbas), their slogan could be "One State for One People (Not the Jews)."

The Obama administration understands that the continuing Israeli-Palestinian conflict harms not only U.S. interests in the region but, even more, Israel's prospects for survival. That is why the Obama administration has made it clear that it wants to stop the settlements now.

Secretary of State Hillary Clinton could not have been more emphatic in a statement she made this week that was airtight in its opposition to settlements. She said that the United States "wants to see a stop to settlements--not some settlements, not outposts, not natural-growth exceptions." The administration's position on settlements has been endorsed by key pro-Israel legislators like Senate Foreign Relations Committee Chair John Kerry, Senator Carl Levin, House Foreign Affairs Chair Howard Berman, and the longest serving Jewish member of Congress, Henry Waxman.

But Defense Minister Ehud Barak argues that nobody could seriously believe that a "natural growth" exception threatens peace.

And he's right. No one believes that adding a bedroom in Ariel because twins are soon to arrive ("natural growth") endangers the peace process.

But, unlike its predecessors, this administration understands that the "natural growth" excuse is just that. Whenever the United States asks Israeli governments to do anything to advance peace with the Palestinians, it comes up with excuses as to why it can't.

Even when the Bush administration (which Israelis consider the friendliest ever) finally got Israel to accept its Roadmap, Israel added fourteen unilateral reservations. And then, when it failed to implement any part of the Roadmap, it pointed to its own reservations as justification. Of course, accepting an agreement with unilateral reservations is not acceptance at all but rather rejection. ("I accept your offer of $750,000 for my house but at $1.2 million.")

In the past, the United States has accepted that approach.

No more.

Yedioth Achronoth correspondent, Sima Kadmon, reported yesterday that Netanyahu and his aides are rattled by this unexpected American grit.

"Netanyahu arrived only to discover that the United States is no longer the same United States and that the Congress is no longer the same Congress. That he has no other option when confronting Obama and that he has no excuses to give. If Sharon or Olmert could tell Bush that doing one thing or another would cause their governments to fall, and Bush took this seriously--this is no longer the case. Obama will not shed any tears if Netanyahu tells him that his government will fall as a result of removing outposts. He won't be telling him: 'oy, just don't leave me.' What's the worst that can happen? Livni will become prime minister? That certainly doesn't worry Obama."

Kadmon writes that Netanyahu understands that Israel "cannot simply entrench ourselves in the spot and place our trust only in ourselves. These are not the days of Shamir when we could show contempt for U.S. aid. We are on a completely different playing field these days. You can't just tell the Americans, get lost, because they might just get lost and what would we do then?"

Adding to Netanyahu's problems is the lack of support of the status quo lobby for his hard-line position on settlements. No major Jewish organization, with the exception of the tiny far right Zionist Organization of America (allied with the settlers), is backing his position. AIPAC, which has not spoken out one way or the other, has never explicitly supported the settlement enterprise. The last thing it wants is to do battle with a popular American president over an issue it has never cared about.

In short, this is a battle that Obama can win, and it is one that is worth fighting. "Stopping the settlements" (in Secretary Clinton's words) would both begin a process toward ending the Israeli-Palestinian conflict and would show the world that the United States is actually trying to play the role of honest broker--and not Israel's lawyer--for the first time in many years.

In today's Foreign Policy magazine blog, The Cable, Laura Rozen, the well-connected and brilliant Middle East analyst, reports that Netanyahu responded to Secretary Clinton's statement in real pain "What the hell do they want from me?," he asked.

Actually they don't want much: just an end to the settlement enterprise that is killing Israel and an end to the siege that is killing Gaza. In both cases, he only needs to live up to commitments the Israeli government has already made.

I have written since Obama's election that the main ingredient necessary for the United States to end the Israeli-Palestinian conflict is Barack Obama's will. If he does not blink, he will prevail. He's not blinking.