The recent Israeli election has presented a complex policy conundrum for the United States. It’s not just that the Obama administration will be faced with yet another term for Prime Minister Benjamin Netanyahu. What’s really at stake is whether the United States has a policy towards, and bilateral relations with, the Palestinians that are independent of the overall thrust of US-Israel relations.

Towards the end of the Israeli election campaign, Netanyahu bluntly stated that Israel cannot countenance the establishment of a Palestinian state. Even though he has been trying to backtrack from them, these remarks seem to resolve widespread doubts about his commitments. He had a long history of opposing the idea of a two-state solution until he seemed to embrace it in a 2009 speech at Bar Ilan University. But his ideological orientation, numerous caveats and reservations, and, above all, his policies—especially aggressive settlement activity—led many to question his sincerity.

President Barack Obama seems unimpressed with Netanyahu’s protestations that he didn’t really mean what he said. But the problem isn’t just Netanyahu. His comments came at the end of a hard-fought campaign that broke at the last minute heavily in favor of the incumbent.

Moreover, Netanyahu is still what he has long been: a supporter of the status quo. He doesn’t want to take any risks for peace—which he doesn’t believe in—but at the same time he doesn’t want to do anything radical, such as annexing parts of the occupied territories. Regarding the Palestinians and the occupation, Israeli society has been divided into two major competing camps for several decades. But the nature of that division has radically altered. It used to be that, as the leader of the pro-status quo forces, Netanyahu was fending off challenges from the pro-peace left. But in recent years, he has instead been fending off challenges from a new rising tide in Israeli society: the annexationist right.

Netanyahu is still where he has always been; in the pro-status quo center. But the Israeli political constellations swirling around him have moved dramatically to the hawkish right. Netanyahu knows this, which is why, faced with an unprecedented political crisis during the campaign, he pushed hard against Palestinian statehood and won big as a consequence.

It is this broader change in attitudes among Israelis that poses such a challenge to American policy. For many years, the consensus in Washington has been something of an oxymoron: “peace between Israel and the Palestinians is a vital American national interest, but we cannot want it more than the parties themselves.” This internally-contradictory formulation was unstable enough under the best of circumstances. But now that one of the two parties appears to be categorically, and perhaps irrevocably, rejecting a two-state solution that is the bedrock of American policy and international law on the question, our bluff has been called. Americans must now decide which of the two phrases in the policy consensus has primacy: the vital national interest part, or the caveat about the cooperation of the parties.

Some observers have argued that, from its outset, US diplomatic relations with the Palestinians and engagement with the peace process has been almost entirely a function and subset of the relationship with Israel. Even though President George HW Bush had to coerce Prime Minister Yitzhak Shamir into attending the Madrid Peace Conference in 1991, significant constituencies in Israel were already interested in pursuing an agreement with the Palestine Liberation Organization (PLO). The PLO and Israel conducted secret negotiations in Norway, without the participation of the United States, leading to the Oslo Accords. This demonstrates that American pressure was not required during that era to push Israel into serious talks with the Palestinians.

There are numerous narratives regarding the subsequent American role in the peace process, but most serious accounts acknowledge that the United States tended to defer to Israeli concerns. If there is a consistent exception to this pattern, it is in the American insistence on a two-state solution. The most obvious distinction in the way which the United States dealt with the two parties in the peace process is that Palestinian non-cooperation, such as initiatives at the United Nations, has met with tangible, serious responses such as cuts in aid to the Palestinian Authority (PA). Israeli intransigence, on the other hand, has prompted criticism at most.

Americans now face an unprecedented conundrum. Long-standing ally Israel, which also has considerable domestic political clout in the United States, opposes the consensus goal of a two-state solution. The PLO and the PA support it. Several administration officials are speaking about the need to “reassess” American relations with Israel, though it’s hard to imagine any significant readjustment of the sacrosanct “special relationship.”

Yet, like it or not, the United States will now have to decide whether our commitment to a two-state solution was an independent policy or always conditional on the understanding that it was also an Israeli aspiration. Alas, it’s all-too-easy to imagine an adjusted American position evolving over the next few years that at least de-prioritizes the US commitment to a Palestinian state. There are countless millions around the Middle East and the world whose investment in Palestinian rights and ending the occupation defines their worldview. What would be the effect on their perceptions if they came to believe—with good reason—that American rhetoric about supporting Palestinian statehood was always primarily contingent on Israel’s wishes and convenience, and might therefore be viewed as a cruel hoax?

The alternative would reassert American leadership in relations with both Israel and the Palestinians, and in the Middle East more broadly. Such options must include steps that clarify American expectations regarding a two-state outcome are non-negotiable, that are independent of Israel’s shifting positions and designed to send Israel and the world a clear message. And, at last, they must make it clear that Israel will pay a price for obstructing a two-state outcome.

Measures to penalize Israel for continued settlement activity in areas the United States believes must be part of a Palestinian state are politically difficult. However, if the United States is serious about salvaging a two-state solution, they will almost certainly be necessary and therefore possible. Measures such as support for UN Security Council resolutions reiterating the international demand for the creation of a Palestinian state or opposition to Israel’s illegal settlement activity—both of which the Obama administration has shied away from in the past—should be well within reach. There are many other ways in which the White House can act at once, even without Congressional support, to ensure that Israel feels the impact of American dismay.

This would also give the United States the opportunity to support, and politically and financially shore up, the PLO and the PA. That would send a clear message to both Israel and the Palestinian people about the American commitment to peace based on the creation of a Palestinian state, and strike a helpful political blow against Hamas and its patrons. The United States can also use that re-vamped relationship with Ramallah to press for Palestinian cooperation on peace and needed political and economic reforms by the PA. And it can help that process by increasing the US engagement with Palestinian small business and civil society, bypassing both Israeli obstacles and Palestinian red tape and potential corruption while strengthening the broader society in the West Bank.

The bottom line is that the Israelis, the Palestinians and the rest of the world will be waiting to see how the United States responds—practically, and not rhetorically—to Netanyahu’s rejection of the long-standing American policy goal. Our credibility is very much on the line. Netanyahu clearly did not mean it when he insisted he was for a two-state solution. Did we?