A current school of thought on how the U.S. should deal with the recalcitrant Netanyahu is that it should tighten the screws. The argument, persuasive at a certain level, goes like this: Netanyahu has spent the past year making it crystal clear that he will never agree to a viable Palestinian state, so continuing polite discussions is mere charade. This is certainly true, but it does not necessarily follow that "turning the screws" will work: there is a severe political constraint on what Washington's timid politicians will ever have the courage to do. Therefore, while pressuring Israel may be deserved and emotionally satisfying, an alternative and quite obvious approach holds more promise of achieving a breakthrough in the Israeli-Palestinian dispute.
The more promising approach is straightforward and logical: talk to people willing to cooperate rather than wasting time with those intent upon cheating. This can proceed on three levels. First, Israelis disenchanted with their government's intransigence and concerned about Israel's long-term security are speaking out loudly; listen to them. Second, Turkey, Brazil, and Japan have all made it clear that they are willing to assist in any genuine effort to achieve a Mideast compromise. Third is the Palestinian level. After all, the issue does concern the Palestinians, so why not talk to them? Extend an invitation to all concerned Palestinian parties to meet with U.S. and allied representatives, making clear that Washington will favor not individuals or groups but all those willing to join together in a Palestinian united front dedicated to establishing an independent, democratic state.
If the Netanyahu regime chooses to exclude itself from this dialogue, then simply leave it be. Let history pass it by.