The Israel lobby is mobilizing for what might turn into the most significant confrontation between the United States and Israel since, well, the Suez War of 1956, when President Eisenhower told Israel — and its covert allies, the UK and France — to halt the unprovoked assault on Egypt. Since then, US-Israel conflicts have been relatively small and tied to side issues, such as the fight over President Reagan’s sale of AWACS surveillance aircraft to Saudi Arabia in the early 1980s or President Bush’s showdown with Israel in the early 1990s, when the United States threatened to withhold loan guarantees to Israel after a right-wing Israeli government stone-walled the peace process.

This time, if President Obama plays his cards right, he could bring down the extremist government of Bibi Netanyahu. But that depends on whether Obama displays the guts and gumption necessary for a full-frontal challenge to the American Israel Public Affairs Committee and its allies.

In a piece written for Mother Jones last year, I outlined the vulnerability of AIPAC et al. to a direct challenge from Obama, especially with the emergence of J Street, the “pro-Israeli, pro-peace” Jewish lobby.

A year ago, it seemed possible that Obama was headed in that direction. He’d nominated the even-handed George Mitchell as his Israel-Palestine special representative, to the discomfort of AIPAC. He’d installed a number of aides at the White House, including General Jones, Mara Rudman, and others who had sympathies with the Palestinians and with the Israeli pro-peace camp. Obama launched a major effort to rebuild US ties with the Muslim world, including his June speech in Cairo, that all but required a stronger US effort to force concessions from Israel. And he’d ordered a showdown with Israel over its illegal settlements in occupied Palestinian lands, demanding outright that Israel stop building them.

Nearly all of that collapsed. Mitchell got nowhere. Netanyahu bluntly rejected the settlements demand, kept building them, and faced no consequences. And, worst of all, Obama utterly failed to put forward an American peace plan to restart the talks. What was needed then, and now, is for Obama to outline what a final settlement of the conflict will look like: a return to the 1967 borders (with some land swaps), the division of Jerusalem, the removal of Israeli encampments from the West Bank, a sovereign Palestinian state, a deal over the Palestinians’ right to return to their land (including a Saudi- and Gulf-financed compensation package), and probably some sort of US security guarantees for Israel.

Obama didn’t deliver. He never stated the end goal. Now, he has another chance. His new opportunity was handed to him last week when Netanyahu’s government slapped visiting Vice President Biden in face by announcing, during a high-stakes, delicate trip, a plan to build 1,600 new Jewish homes in occupied East Jerusalem. In the aftermath of that event, the entire Obama administration has been mobilized against Israel. The key question is not whether Obama and Co. will slam Israel rhetorically, as they’ve done, buy whether there will be concrete consequences for Israel and whether the Obama team will finally relaunch the all-but-dead peace process by declaring the president’s own vision of the terms that Israel, the Palestinians, and the Arab states must agree to.

As the New York Times editorialized last week, following the Biden visit fiasco:

“We also hope that if progress lags, the administration will be ready to put forward its own proposals on the central issues of borders, refugees, security and the future of Jerusalem.

“Mr. Obama has another chance to move the peace process forward. This time he has to get it right.”

Biden, of course, used the word “condemn” in reacting to Israel’s defiant action, saying: “I condemn the decision.” Then rhetorically at least, the US got even nastier. Hillary Clinton — who, like Biden, prides herself as being militantly pro-Israel — used the word “insult” in slamming Israel: “The announcement of the settlements on the very day that the vice president was there was insulting,” said Clinton.With Obama’s approval, she delivered a 45-minute tongue lashing to Netanhayu over the phone. And yesterday David Axelrod, the White House political adviser chimed in, saying: “What happened there was an affront. It was an insult.”

Netanyahu, while faking an apology, insists — as does his entire right-wing regime — that it won’t change policy or back down.

The lobby is mobilizing. AIPAC, in a defensive statement, called the whole thing a “distraction,” and it added:

“AIPAC calls on the Administration to take immediate steps to defuse the tension with the Jewish State. … The Administration should make a conscious effort to move away from public demands and unilateral deadlines directed at Israel.”

Abe Foxman of the Anti-Defamation League, a knee-jerk defender of everything Israel does, accused the US of a “gross overreaction” to the Israeli insult, adding:

“We are shocked and stunned at the Administration’s tone and public dressing down of Israel on the issue of future building in Jerusalem. We cannot remember an instance when such harsh language was directed at a friend and ally of the United States. One can only wonder how far the U.S. is prepared to go in distancing itself from Israel in order to placate the Palestinians in the hope they see it is in their interest to return to the negotiating table.”

And a panoply of Israel’s best friends in Congress are trying to preempt an Obama response to the Israeli insult that goes beyond rhetoric, too. Representive Shelley Berkley (D.-Nevada) called the Clinton-Axelrod statements part of an “irresponsible overreaction,” and the ever-reliable John Boehner, the Republican leader in the House, told Commentary that “the tone and substance we are seeing emerge as a pattern for this Administration are both disappointing and of great concern.”

Various neocons are weighing in, too. Writing in the Washington Post, Elliott Abrams accused the Obama administration of “mishandling” relations with Israel, adding: “The Obama administration continues to drift away from traditional U.S. support for Israel.” In the same vein, Danielle Pletka of the American Enterprise Institute, expressed alarm about a “tectonic drift” pushing the US and Israel apart, concluding:

“Israel and the United States have been drifting apart for some time, though that pace has accelerated during the Obama administration. The currents that have set Washington and Jerusalem on different courses are complex and cannot be boiled down to one failed mission (that of Vice President Biden) nor an indifferent president (Barack Obama). There is a generational shift underway, driving apart post-Zionist Israel and 21st-century America.”

And Robert Satloff of the militantly pro-Israel Washington Institute for Near East Policy warned the administration not to tilt away from Israel after the insult to Biden:

“It would be shortsighted for the administration to use this episode as an opportunity to reward the Palestinians. … And it would be an analytical blunder for the administration to believe that this incident is an opportunity that could precipitate Netanyahu’s political demise.”

Underlying all this is not just the reaction to an insulting announcement during the visit of Vice President Biden. Instead, at a more fundamental level, the Obama administration is beginning to realize that Israeli intransigence — and the Netanyahu government, in particular — is a major obstacle to US policy in the region, from Iraq to Iran to the struggle against Al Qaeda. It still remains to be seen if the White House the courage to do anything about it. In 2009, it didn’t. But this is 2010.

Tomorrow: the strategic underpinnings of Obama’s unease with the Israelis.