The Israel-Hamas war has refocused international attention on the Israeli-Palestinian conflict and increased the stakes surrounding U.S. President Barack Obama's handling of the Palestinian bid for recognition at the United Nations as a non-member state. Palestinian Authority President Mahmoud Abbas intends to submit that bid on November 29th -- the 65th anniversary of the U.N. resolution to partition the territory of Palestine into Jewish and Arab states.

Not only does the American president have to decide how to respond, so too do the U.S. Congress and Israel's leaders, who will face voters on January 22. How each of these parties reacts will have momentous repercussions for America's standing in the Arab world, Israel's security (specifically whether Abbas or Hamas controls the West Bank), and the viability of the two-state solution. On the eve of the U.N. vote, Israel and the United States are both actively opposed to the Palestinians' statehood campaign.

Add to these factors Abbas's remarkable interview on Israeli television earlier this month. "We will not go back to terrorism and violence," he said. "We will only operate through diplomacy and through peaceful means." Abbas then made a surprising concession on the refugee issue that has long plagued Israeli-Palestinian peace talks, noting that while he is a refugee from Safed, he would like to visit but not live there. "Palestine for me is the 1967 borders with East Jerusalem as the capital," heexplained. "The West Bank and Gaza is Palestine. Everything else is Israel." Just days before this interview, in Ramallah, Abbas confirmed to a small group of former Israeli generals, including me, that he will ask the Israeli prime minister to restart direct peace negotiations immediately after U.N. recognition.

So what should Obama do? The truth is that the Palestinian bid will gain a solid majority in the U.N. General Assembly anyway and is all but certain to succeed (the resolution doesn't need to go through the Security Council, where the United States wields a veto), and active American opposition will not improve the popularity of the United States in the Arab world. Washington should back the effort, but condition its support on a clear commitment by the Palestinian Authority (PA) not to use its new U.N. status to sue Israel at the International Criminal Court or pursue other measures such as academic or commercial boycotts. Such an approach would position the United States again as a power that actively encourages the two-state solution and sides with the moderate forces in the Arab world.

If, however, the U.S. Congress follows through with its threat to cut financial support to the Palestinian Authority as part of a series of punitive measures for Abbas's campaign at the United Nations, it would be a shot not in the foot but in the liver -- Israel's. If the PA collapses economically and Palestinian security forces have to stop their operations because of budget constraints, the struggle against terror in the West Bank will suffer dramatically. The Israel Defense Forces (IDF) will then have to increase their presence in the West Bank at the expense of other areas in the region, generating more unnecessary friction with the population in the territory. The fruitful cooperation between the IDF and Palestinian security forces -- trained and organized by Lt. Gen. Keith Dayton's team -- will collapse, reversing the most impressive American achievement on the ground in recent years. The near-total cessation of terrorist activity in the West Bank in the last four years is a result of this cooperation. Without it, more Israelis will be killed. And Israel's friends in Congress must remember this.