Prime Minister Benjamin Netanyahu was the sixth Israeli leader to concede the expression "Palestinian state." It was a first for Mr. Netanyahu, but the caveats drained it of any significance. Besides, events in a soon-to-be nuclear-capable Iranian theocracy - some now say thugocracy - where elections were rigged in favor of a president who despises the United States and sees no room for Israel in the Middle East, dictated geopolitical prudence. Even more so now that hundreds of thousands of young Iranians - the majority of Iran's 70 million people was born after the 1979 Islamic revolution - are protesting President Mahmoud Ahmadinejad's lopsided victory.

Nine U.S. presidents have asked Jerusalem to cease and desist expanding settlements. Reassured by a friendly U.S. Congress, even a wink and a nod from President George W. Bush, successive Israeli governments have ignored gentle slaps on the hand - and expanded. Mr. Netanyahu made clear that "natural growth" in West Bank settlements - just under 300,000 settlers in 160 settlements and almost 200,000 in East Jerusalem - will continue with the arrival of 10,000 new babies a year.

The dismantling of these settlements - a sine qua non for a Palestinian state - was not even mentioned by President Obama, let alone Mr. Netanyahu. A Palestinian capital in Arab East Jerusalem is a Palestinian sine qua non. For Israelis, from left to right, it is non-negotiable. Ditto the right of return for hundreds of thousands of Palestinian refugees to their original family homes in Israel.

Many of the West Bank settlers are American-born. The overwhelming majority chose to be pioneers in what they regard as the ancestral land of Israel. This means that even if a peace treaty is negotiated between Israelis and Palestinians, it cannot be implemented in the West Bank, pockmarked as it would be with fortified Israeli settlements.

The still mythical Palestinian state, if it ever became reality, explained Mr. Netanyahu, would have no air rights over its country and no armed forces, only a lightly armed constabulary and police. Some former U.S. ambassadors in the region are suggesting that negotiations, when they start, should begin drawing lines on a map where they think the common border should be. For the Israelis, the frontier would follow the 420-mile-long, $2.5 billion razor-backed Wall of Separation, under construction since 2002, that snakes in and out of Palestinian territory to a depth of four miles.

Israeli annexation, the barrier, settlements, settler bypass roads, closed military zones, have left available only 13 percent of the 660-square-kilometer Bethlehem governorate.

While there are about 175,000 Palestinians living in the Bethlehem area, there are also 86,000 Israelis, including Foreign Minister Avigdor Lieberman, in 19 settlements. The West Bank's water aquifer runs under West Bank settlements from north to south. And close to 90 percent of the steel and stone wall-ditch-razor wire is on Palestinian land, inside the West Bank, encircling Palestinian towns and villages, separating farmers from their land and Palestinians from their workplaces.

Disentangling such an imbroglio through negotiations would take years. And, says Mr. Netanyahu, its Palestinian interlocutors would have to recognize Israel as a Jewish state. They would also have to produce a united Palestinian government that would announce its readiness to negotiate with Israel. But such a government would have to include Hamas, a hard-lining party that rules Gaza, operates underground throughout the West Bank and is still dedicated to the destruction of Israel. A two-state solution is chimera.

Israel has a far more immediate problem with the emergence of a nuclear state whose current president wants Palestine to replace Israel in the Middle East. Last month, Iran test-fired a 1,200-mile, solid-fuel missile capable of reaching most of the Middle East.

While Russia and China are genuinely alarmed by Kim Jong-il's nuclear antics, they are yet to show comparable alarm about Iran's nuclear bazaar. Diplomatic carrots and sticks have proved ineffectual as the goodies Iran seeks are still smuggled in clandestinely, principally through Dubai, where some 400,000 Iranians live and work.

The one big stick guaranteed to hurt is Iran's dependence on imported gasoline - 40 percent of its domestic needs - as it does not have enough capacity to refine its oil. But this would require some form of blockade that Iran would see as a casus belli. And volleys of Iranian missiles against U.S. and American allies in the Gulf could follow.

Both Russia and China are opposed to a tougher sanctions regime. Iran imports Russian military hardware; China has long-term contracts for Iranian oil. Germany is Iran's most important Western trading partner - 1,926 business deals in 2008, 63 percent more than in 2007. Italy's deals fetched $5 billion.

A new page in the Iranian nuclear saga has already been turned in the Gulf. Saudi Arabia, Kuwait and the United Arab Emirates now share U.S. and Israeli alarm over a nuclear revanchist state that may still be ruled by a diminutive, bearded civilian hothead for the next four years. Each new president since the revolution 30 years ago has enjoyed two terms at the pleasure of the supreme religious leader, Ayatollah Ali Khamenei. Four more years of Mahmoud Ahmadinejad is almost guaranteed to produce a nuclear showdown, much as Mr. Obama seems determined to avoid one. A successful revolt by Iran's youth in the streets of Tehran might force Mr. Ahmadinejad out of power, but the man they voted for is no moderate.

Mir Hossein Mousavi was Iran's prime minister during the Islamic Revolution's harshest years (1981-89), which included an eight-year war with Saddam Hussein's Iraq in which 1 million were killed. He was a hard-liner closely allied with then-President Ali Khamenei, who is now the supreme leader.

Some Iranian experts say Mr. Mousavi is Mr. Ahmadinejad's ideological twin, albeit patrician and sophisticated.

Arnaud de Borchgrave is editor at large for The Washington Times and for United Press International.