Bibi's speech at Bar Ilan last night was the right speech at the right time. From an Israeli perspective, I can't think of a better move.
In the introduction, he essentially expressed the "Jabotinskyan" view, that the source of our conflict with the Palestinians is a refusal to accept the existence of a Jewish entity here. It is not about settlements, land or borders. He demonstrated this claim's truth unequivocally by reminding the listeners of recent history. Every withdrawal, with or without an agreement, has been met by terror and demands for more concessions. Its important to understand this point, which isn't about being "right", its about being practical. For if the Palestinians reconcile themselves to a Jewish presence here, all other things will fall into place. Without it, no matter how many concessions Israel makes, peace will not get any closer.
In Netanyahu's acceptance of a Palestinian state, albeit one with limited powers, along with a demand to recongize Israel as a Jewish state, Bibi is calling the Palestinians' bluff. His conditions are not pre-conditions for negotiations. They are conceptual requirements for an agreement, without which there will be no peace. For if the Palestinians reject the idea of a dimilitarized country, and a Jewish Israel, what they are calling for is to Israel to agree to its own dismantlement. The Palestinians know that the significance of recognizing a Jewish state is that there will be no return of refugees to Israel.
So the Palestinians' reactions are telling. They say that Bibi's "conditions" are a non-starter, and that no Palestinian in a 1000 years will agree to his proposals. By their standards even the Geneva accords would be a non-starter. What are they saying? They are saying that refugees must be allowed to return to Israel, and that Palestine must have an army and be allowed to make treaties with anybody they want. This is the only logical way to understand their position. Any other leftist Israeli attempts to re-interpret Palestinian positions is delusion. No, the Palestinians will NOT be satisfied with a "theoretical" right of return, because Arab countries will not repatriate refugees and Palestine cannot absorb them. Will Lebanon grant citizenship to hundreds of thousands of Palestinians? What about Egypt and Syria?
What is truly astonishing is that the Palestinians actually expect Israel to knowingly and willingly agree to its own dismantlement, by allowing refugees in and allowing another armed entity arise in the West Bank which would threaten vital Israeli interests.
Lets hope the Obama wakes up before he forces Israel into harmful concessions which would eventually lead to another blowup in the region.