Editor's note: Aaron David Miller is a public policy scholar at the Woodrow Wilson International Center for Scholars. He served as a Middle East negotiator in Democratic and Republican administrations. His new book "Can America Have Another Great President?" will be published by Bantam Books.
Washington (CNN) -- The current flap over Israeli settlement construction in East Jerusalem is a real humdinger, but it isn't the worst moment in the history of U.S.-Israeli relations.
The Suez Crisis (1956), Secretary of State Henry Kissinger's reassessment of U.S.-Israeli relations (1975) and America's denial of housing loan guarantees to Israel (1991) saw relations at a much lower ebb, complete with the threat of sanctions -- and in 1991 the actual use of them.
At the same time, those who expect the latest crisis to be resolved quickly or easily are whistling past the graveyard. It won't be easy to restore trust and confidence or agreement on an approach toward Arab-Israeli negotiations.
The latest tension over Israeli building in East Jerusalem is only the latest twist in the ups and downs in the relations between the Obama administration and the government of Benjamin Netanyahu.
Clearly, the Israelis are responsible through their inept and incoherent policies for the latest crisis. After 13 months, the Obama team is still not sure how to deal with Netanyahu. To paraphrase Shakespeare, it's not sure whether it wants to bury or praise the prime minister.
Even though the Middle East peace process sometimes feels like Shakespearean tragedy, it's the real world. And in that world, President Obama has yet to develop a coherent strategy toward the Arab-Israeli negotiations driven by the right mix of reassurance and toughness. Until he does, and gets some measure of cooperation from Israel, we can expect more soap opera than serious policy in the negotiations.
Like most everything else in Obama World, from health care to closing Guantanamo, reality seems to be the ultimate teacher and downsizer.
In January 2009, the administration came out loud, hard and fast on the Arab-Israeli issue. For the tough-minded Likud prime minister, Obama represented a real challenge. Netanyahu and many other Israelis worried that this president might jam Israel on the peace process.
Indeed, it looked like we were in for a sequel to a movie we'd seen a couple times before: a face-off between tough Likud prime ministers (Begin and Shamir) and equally steely American presidents (Carter and Bush 41).
But what is transpiring under President Obama is quite different. True, the president confronted a much more difficult environment -- big issues such as Jerusalem and refugees and big gaps between the Israelis and the Palestinians.
Still, the administration lacked a coherent approach to dealing with the tough hand it had been dealt. They talked tough, calling for a comprehensive settlements freeze, which no Israeli prime minister could accept. But when the Israelis said no, the administration went into retreat; to make matters worse, the Saudis said no to even partial normalization and the Palestinians said no thank you to coming back to negotiations.
Last week's brouhaha over East Jerusalem during the trip of Vice President Joe Biden -- provoked by Israel's Ministry of the Interior but acquiesced to by Prime Minister Netanyahu's continuing willingness to flout American objections to settlement activity -- opened up a wound that will be tough to close.
It points out again the need for a coherent and effective American policy to deal with the negotiations, the only instrument that has any chance of dealing with the settlement issue.
Settlements are a huge problem. They prejudge the outcome of negotiations, humiliate the Palestinians and make America, as Israel's closest friend, look weak.
But going to verbal war with the Israelis over them is really a dog's lunch. No Israeli prime minister can halt all construction, certainly not in Jerusalem. The ensuing struggle will divert all sides from the right focus on negotiating an agreement.
Instead what the administration should do is develop a serious approach to get those talks started. Unless Obama is planning to try to get rid of the current Israeli government, he really has no choice but to work with it.
The nuclear ambitions of Iran is reason enough to want the cooperation of the Israelis and some leverage over them in the period ahead.
I'm not a great believer in the prospects of a conflict-ending agreement between Israel and the Palestinians now on the core issues.
But if Obama is serious about getting a peace agreement, he's got to identify a serious strategy to try to get one. Proximity talks, in which the two sides meet separately with American intermediaries, just won't do.
The United States needs to be talking to both sides separately at first; but also convening three-way negotiations and pushing the two to talk directly to one another. And it must be prepared to offer up its own ideas and views when the Israelis and Palestinians reach an impasse.
Finally, for this to have any chance of working, the president and prime minister will have to reset their relationship. Without Israel's confidence, this deal won't happen.
Obama shouldn't be gratuitously praising or burying Netanyahu; he should be testing and pushing Israel and the Palestinians to determine whether an agreement is possible, first on borders, then on Jerusalem and refugees. If things look promising, he should offer the incentives and reassurances necessary to make it work.
If it does work, no one will care about past tensions between America and Israel. After all, as the Bard wrote: All's well that ends well.
The opinions expressed in this commentary are solely those of Aaron David Miller.