Prime Minister Benjamin Netanyahu is quite right. As he said in his speech at the Knesset on Monday while greeting Brazilian President Luiz Inacio Lula da Silva, over the last four decades, every single Israeli government has built Jewish neighborhoods in East Jerusalem.

No prime minister, from the right, left or center, has ever caved to international pressure and agreed to curtail the development of the capital east of the Green Line.

What Netanyahu did not say, but certainly alluded to, was that until last weekend, no American administration had ever openly demanded that Israel abort a housing project in East Jerusalem. This is also perfectly true.

But there is another conclusion to be drawn from Secretary of State Hillary Clinton's unprecedented ultimatum - revoke the planning permit to build 1,600 new homes in Ramat Shlomo or else - and that is the simple fact that on no other Israeli prime minister's watch has Israel's most crucial international alliance been allowed to deteriorate so badly, and so quickly.

Even supporters of U.S. President Barack Obama would have to agree that his foreign policy over the past year, particularly in the Middle East, has been exceptionally clumsy, to say the least. It's not only Israelis who feel exasperated at the way the Obama administration has tried to "engage" and curry favor with despotic regimes, from Russia to Iran to China, at the expense of America's traditional allies in many parts of the world.

The Obama approach has not only failed to deliver results, it has by and large emboldened tyrants and dictators to harden their opposition to America and the West.

But the superpower can afford to make mistakes, even major ones, in its diplomatic policies; it will have enough time and resources to fix its failings. For a country like Israel, the margin for error is much slimmer.

When senior ministers or generals list Israel's defense priorities, there is always one point on which there exists total consensus: The alliance with the United States as the nation's greatest strategic asset, way above anything else. It is more crucial than the professionalism of the Israel Defense Forces, than the peace treaty with Egypt and even than the secret doomsday weapons that we may or may not have squirreled away somewhere.

Netanyahu is the most Americanized of Israel's leaders. He lived and studied in the United States for many years, one of his marriages was to an American and he considered for a time moving there for good.

But he still has succeeded in one short year in power to plunge Israel's essential relationship with the United States to unheard of depths. The only time in the past when such a degree of animosity existed between the leaders of the two countries was 12 years ago, when Netanyahu was in his first term of office.

The occupant of the Oval Office then was Bill Clinton. Some conspiracy theorists claim that Obama is inherently anti-Israeli, even a closet anti-Semite, but it would be virtually impossible to stick such a label on good 'ol Bill.

A coalition of guilty

So how has it come to this? Why has Netanyahu made all the possible mistakes in dealing with an inept and unsure administration. A large portion of the blame can be put at the feet of his political partners.

At least half of his coalition are pursuing agendas which put Israel on a clear collision course with Washington, and that includes many members of Netanyahu's own party.

Shas leaders want to garner more votes from the right-wing and ultra-Orthodox communities; it is no skin off their back if each time a new low-cost building project for Haredi families in East Jerusalem or the West Bank causes diplomatic strife.

On the contrary, the attending publicity only makes it more attractive to them. Neither do Yisrael Beiteinu's politicians seem overly perturbed when their proposed conversion law infuriates the largest religious organization in the greatest Jewish community in the world, by effectively rendering Reform conversions irrelevant. They are only interested in taking care of their Russian-speaking constituency.

Ultimately, it is Netanyahu who is to blame, not only for appointing Foreign Minister Avigdor Lieberman and Interior Minister Eli Yishai to their current positions, but also for his belief that he can take on the White House, while relying on the support for Israel in Congress and the American Jewish community to offset any damage.

This is not about Israel's right to build in all parts of Jerusalem. Even those who fervently believe in that right and in the continued presence of Israel in all parts of the West Bank, have to understand that the Netanyahu government is wantonly destroying the strategic alliance. It seems at this stage that the only ones who can make Netanyahu finally wake up and realize what he is doing are the Americans who have Israel's interests closest to their hearts. Some on the right have accused the Obama administration of meddling in the domestic affairs of a democratic country, by effectively putting pressure on Netanyahu to dismantle his coalition. This is not an accusation to be taken lightly, but based on facts alone, the Obama administration's moves cannot be construed as an attempt to pervert the will of the Israeli electorate.

Netanyahu was not directly elected by the people, Israel has a parliamentary system of governance and Netanyahu is not even the leader of the largest party in the Knesset, simply the only candidate to succeed in gathering the support of enough Knesset members.

An alternative centrist coalition, in which Kadima (which received more votes in the last elections) replaced the right-wing and religious parties, would represent the public will just as faithfully as the current government.

And lets not forget, a majority of Israelis have favored a two-state solution in every survey conducted over the last decade, something most of the MKs in Bibi's coalition would not cotton to.

This is a moment of truth for American Jews. Next week, Netanyahu will be in Washington to address an AIPAC event. They have the opportunity to act both as loyal American citizens and as Jews who truly care for Israel's future, there is no conflict of interests here and this is not a matter of right or left. The mainstream Jewish leadership has to make it clear, for the good of both countries, that he has overstepped a line, and that if he continues to stick his finger in the Obama administration's eye, he will not be able to continue relying on their support. Fudging this message would be a disservice to Israel and its security.