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A widely predicted crisis between Israel and the United States upon Benjamin Netanyahu taking office as prime minister finally erupted this weekend.

U.S. President Barack Obama did not hold back in condemning the humiliation caused to Joe Biden with the Israeli announcement of 1,600 new housing units in East Jerusalem during what was supposed to be the vice president's friendly visit to Israel.

Instead of accepting Netanyahu's partial apology and letting bygones be bygones, Obama issued a stern warning to the Israeli prime minister and is now demanding that he take "specific actions" to show he is "committed" to the U.S.-Israel relationship and to the peace process itself.

Washington did not reveal the contents of the ultimatum or the list of demands reportedly presented to Netanyahu. Those conditions, however, could undermine the prime minister's coalition ties to hard-line right-wing parties like Yisrael Beiteinu and Shas, as well as provoke strong criticism from within his own Likud faction. In case Netanyahu still fails to understand the situation, a U.S. official told Reuters yesterday that the Israeli leader's rightist coalition leaves him in a "perilous" situation.

The prime minister has reached the moment of truth, where he must choose between his ideological beliefs and political cooperation with the right on one hand, and his need for American support on the other.

It is a difficult dilemma. If he comes into conflict with the U.S. administration - hoping his friends in Congress and the Jewish-American community support him in the name of Washington's obligation to the "eternal capital of the Jewish people" - he could jeopardize Israel's security cooperation with the Americans against Iran. Netanyahu knows that the fuel and spare parts for Israel's air force, as well as the warning signals for missiles headed this way, all come from the United States. He also knows that Israel has no other allies with which to face the threat posed by the Islamic Republic.

The Obama administration has until now refrained from exerting firm pressure on Netanyahu, fearing it might lead to his coalition's collapse and a political crisis within Israel. High-ranking officials in Washington believe that tightening the terms for a settlement construction freeze in the West Bank and the dismantling of outposts could lead to a deep rift within Israeli society, or even a mutiny within its military.

In November, Netanyahu's government agreed to a temporary freeze on settlement building, but only on condition of the continued development of East Jerusalem. This time around, the prime minister thought he could once again survive the crisis, having apologized to Biden for the "unfortunate timing" of the Interior Ministry's announcement of the construction plan.

Netanyahu did not, however, promise that the housing units in Ramat Shlomo would not be built, or that his government's policy on developing East Jerusalem would change. The construction plan is still pending, he said, and would not be implemented anytime in the next few years.

His adversaries in the Obama administration spotted a perfect opportunity to strike, to teach him a lesson in national honor - taking a leaf out of the diplomatic playbook of Foreign Minister Avigdor Lieberman and his deputy, Danny Ayalon. Biden was humiliated in Jerusalem, and America is now returning the favor.

Washington delivered its rebuke to Netanyahu through a number of channels. There was the extended censure by telephone from Secretary of State Hillary Clinton, a phone call from Biden, the summoning of Israel's ambassador to Washington to the office of Deputy Secretary of State James Steinberg, the condemnation from the Quartet and, perhaps most important, a media briefing Clinton delivered during a CNN interview which escalated private rebukes into a full-blown public reprimand.

The reproofs were reminiscent of the "low chair diplomacy" the Turkish ambassador to Jerusalem was subjected to by the Israeli Foreign Ministry at the beginning of the year. The media was informed that the conversation between Clinton and Netanyahu lasted 43 minutes, "rather than 10 minutes as usual," and that the prime minister barely uttered a word.

Obama himself reportedly worded the message to be delivered to Netanyahu during his weekly Thursday meeting with Clinton, lest the argument be made that it was merely the secretary of state scolding the Israeli leader, and not the U.S. president himself.

A State Department spokesman described the conversation using phrases which bring to mind a teacher castigating a student, not a working discussion with the leader of a friendly country and ally.

The substance was no less damning than the form - Clinton spoke of an "insult" to the United States and of "harming bilateral ties." She could not understand, she said, how such a thing could have been done in light of America's strong obligation to Israel's security. U.S. media interpreted these remarks as suggesting that Washington's military support for Israel is hardly unconditional.

Clinton dismissed Netanyahu's explanation that the decision to approve the housing plan was made without his knowledge, reminding him that as prime minister he is responsible for his government's actions.

The statements from the United States were publicized Friday evening - Shabbat - while Israel was officially unable to respond, therefore affording the White House a media exclusive. The instinctive reaction from Netanyahu and his associates was to accuse Washington of a diplomatic ambush, to simply rely on the support of his backers in the United States. Indeed, Abraham Foxman, national director of the Anti-Defamation League, was the first to charge the White House with "humiliating" the Israeli prime minister.

This week presents Netanyahu with a difficult decision. He may choose to visit Washington as planned to speak at the AIPAC conference, which would embarrass the preeminent pro-Israel lobby and put it on a collision course with the Obama administration. Senior U.S. officials will likely decline meetings with him, unless he agrees to at least some of Washington's conditions. Canceling his flight, however, will be interpreted as acknowledgment of the crisis in U.S.-Israel ties.