On a day when President Obama was forced to acknowledge his defeat at the hands of congressional Republicans on the issue of tax cuts, it appears that he was also bested by another opponent: Israeli Prime Minister Benjamin Netanyahu. The announcement today that the Obama administration has given up on its effort to force Jerusalem to extend a construction freeze of Jewish settlements in the West Bank will be predictably denounced by those who have always equated progress toward peace with Israeli concessions. But the problem with Obama’s push for a freeze had little to do with any actual chance for peace and everything to do with the administration’s obsession with trying to corner Netanyahu.

Since both men were sworn into office last year within weeks of each other, Obama has pursued policies aimed at undermining an Israeli leader he believed was an obstacle to his near-messianic belief in his ability to make peace in the Middle East. But Netanyahu, a wiser man today than he was in his first term in office in the 1990s when he ran afoul of Bill Clinton, has been able to balance his obligation to protect Israel’s vital security interests on the ground with a need to avoid an open conflict with his country’s only ally. While stating his willingness to accept a two-state solution, Netanyahu faced down Obama in 2009 when the latter made an unprecedented attack on Israeli rights to Jerusalem. In 2010, the Israeli again compromised and accepted a temporary freeze on building in the West Bank but not in his country’s capital, Jerusalem.

The problem with Obama’s schemes was not only the president’s pointless antagonism for Israel but also that the other side of the peace process — the Palestinian Authority — had already made it clear that it would not accept a peace deal that recognized the legitimacy of a Jewish state, no matter where its borders were drawn or whether or not a single Jew remained anywhere in the West Bank. So rather than use the Israeli freeze as an invitation to negotiate, they stalled and waited for it to expire before demanding its resumption and, following Obama’s lead, its expansion into Jerusalem.

In the past three months, as the United States did its best to push him to renew the freeze, Netanyahu was again criticized by Israel’s critics for not doing enough for peace (while the same people ignored the Palestinians’ record of incitement and refusal to make peace on any terms), as well as by Israeli right-wingers (including some in his government) for being too soft with the Americans. Netanyahu agreed at one point to accept a freeze renewal but insisted that Obama would have to pay for it with assurances on other issues while still pointedly refusing to include Jerusalem in any deal to stop building Jewish homes. Many Israelis saw this as a reckless concession, but in the end it came to nothing, as Obama seems to prefer to fold on the issue rather than meet Israel halfway. While the future is far from certain, at the very least the prime minister can congratulate himself on avoiding a major public confrontation with Washington while keeping his own governing coalition intact.

But whether or not this was a victory for Netanyahu’s cautious diplomacy, this is no blow to peace. Sensible observers have been saying all along that the Palestinians’ lack of interest in a final-status agreement, as well as the split between Hamas and Fatah, ensured the failure of Obama’s initiative no matter how much Netanyahu was willing to give up. While we can expect Obama to regroup at some point in the not-so-distant future and renew his campaign of pressure on Israel, the end of his freeze folly illustrates again the president’s inability to understand the realities of the Middle East. While the blame for the lack of peace belongs to the Palestinians, the collapse of this initiative is more proof that this administration hasn’t a clue about foreign policy.