Israeli Prime Minister Netanyahu had an excellent response to President Barack Obama’s major speech on the Arab world and the Israel-Palestinian conflict. But it came two days too late, and the net result is another hasbara disaster for Jerusalem.

Netanyahu said on Saturday that Obama had “shown his commitment to Israel’s security, both in word and deed,” in last Thursday’s presidential speech, adding: “We are working with the administration to achieve common goals.”

Why couldn’t he have said that the day of the Obama speech instead of immediately rejecting the president’s views on moving peace talks forward?

Surely Netanyahu understood that with the gaps between the Israeli and Palestinian positions as wide as they are now, the Obama speech was not going to make a practical difference. The Palestinians are determined to push for statehood at the United Nations in September. The president’s effort to derail that effort was not enough to get them back to the negotiating table that they left last fall.

Why, then, didn’t Bibi call the Palestinians’ bluff by welcoming the president’s speech as a good starting point for peace talks — the Israeli leader wasn’t obligated to embrace every aspect of the speech — and put the onus on Palestinian Authority President Mahmoud Abbas and Co. to resume discussions?

Instead, the prime minister was quick to assert that Israel could never abide by the pre-1967 borders, so quick, in fact, that he appears to the world as the primary stumbling block to progress.

The one explanation that makes sense to me is that Bibi wasn’t trying to persuade world opinion with his tough stance. Rather, he was playing to what he considers his most important audience: the Israeli public, and more specifically his political rivals on the right.

Given the premise that all Israeli politics is local, it makes sense that Bibi wanted to prove to his core constituents that he has what it takes to defy the president of the United States. And it seems to have worked, short term. But the deterioration of the relationship between Israel’s leader and his single most important ally in the world is worrisome.

Not that this situation is all Bibi’s fault. It’s clear that the contents of the Obama speech came as a surprise to the prime minister — not the first time this has happened. Remember Obama’s insistence on a settlement freeze two years ago? These small bombshells indicate the lack of trust the White House has for this Israeli leader.

There were more than a few disturbing elements to Obama’s State Department speech. His view of the Arab Spring was so focused on the positive intentions of the young Facebook crowd in Egypt that he did not address the growing worries over a future Muslim Brotherhood government. He made no mention of Saudi Arabia, no doubt because American support for that autocratic government did not fit the themes the president was stressing. And on the Israeli-Palestinian conflict, he made the case that discussions on Jerusalem and the Palestinian insistence on the right of return for refugees come only after the resolution of borders and security. So there would be two stages to negotiations, making Israel all the more vulnerable. Israeli officials had hoped Obama would make it clear that the right of return was simply not in the cards.

(Ari Shavit, writing in the left-wing Israeli daily Haaretz, said that in offering that sequence, “Obama presented Israel with a suicidal proposition: an interim agreement based on 1967 borders.” But Shavit concluded that the “egregious error” was “an honest mistake” on Obama’s part and can be “easily corrected.”)

That may be wishful thinking, but lost in the controversy were the many positive aspects for Israel of the Obama speech, most notably adopting Bibi’s principle that Israel be recognized as a Jewish state and that a future Palestine would be a demilitarized state. It also condemned Hamas and the delegitimization campaign, as well as the effort to establish a Palestinian state at the UN this fall. And it did not mention settlement construction.

Unfortunately, Bibi’s response — asserting that the pre-‘67 borders were “indefensible” without acknowledging Obama’s reference to land swaps — ignored the pluses and echoed the famous resolution of the Arab League summit following the Six-Day War. Known as “The Three No’s” — no peace with Israel, no recognition of Israel, no negotiations with Israel — they indicated to the world the Arabs’ refusal to accept the reality of a Jewish state in the region.

The final communiqué of that summit insisted on the Palestinians’ right to all of Palestine and made a commitment to destroy the State of Israel.

There are those who say the Palestinians’ intentions have not changed. But Bibi didn’t give the world a chance to see that Abbas and his new partner, Hamas, barely able to talk to each other, are hardly prepared to negotiate with Israel.

Bibi’s swift and blunt rejection of Obama’s plan set the two leaders on a confrontational path that the prime minister seemed to revive intentionally rather than defuse when he addressed the annual AIPAC convention in Washington on Monday night.

Speaking to the 10,000 delegates (you read that right, 10,000), he praised Senate Majority Leader Harry Reid (D-Nev.) and Speaker of the House John Boehner (R-Ohio), but barely mentioned Obama, and declared, to great applause: “Israel cannot return to the indefensible 1967 borders.” (The line was not in his prepared text.)

This after Obama addressed AIPAC the day before and sought to clarify his words and assuage those who interpreted his State Department speech a few days earlier to mean that he was calling for Israel to retreat to the pre-1967 borders.

Obama explained on Sunday morning that the Israelis and Palestinians themselves “will negotiate a border that is different than the one that existed on June 4, 1967.” Sounding a bit peeved, he added, “What I did on Thursday was to say publicly what has long been acknowledged privately.” In other words, nothing new in substance, just more directly stated.

But Netanyahu, whose initial reactions to the Obama State Department speech helped rile up some elements of the pro-Israel community to a fever pitch, kept the tension level high Monday night by again implying that the White House is seeking to impose a pre-‘67 “indefensible” border on Israel.

The irony is that the prime minister’s decision to play up the confrontation with Obama, perhaps as a means of bolstering his position back home, was contrary to a major theme of the AIPAC conference, which was “safer, stronger and better together” in reference to the U.S.-Israel relationship.

Across the board, Republican and Democratic leaders emphasized repeatedly during the conference the mutual benefit of strong U.S.-Israel ties, bipartisan support, cooperation, trust, unity, etc. Yet the two top leaders in Washington and Jerusalem clearly are not on the same page — and can’t hide their distrust, one for the other.

This is more than a personal grudge match; it can affect strategic policy and the very future of the Jewish state. Israel, of course, has a lot more to lose here than the U.S., so the onus is on Bibi to make the relationship better.

At the AIPAC conference it was clear that the prime minister’s initial reaction to the Obama State Department speech left delegates with a sense of deep concern about U.S. plans. For many, the mood at the Washington Convention Center reflected a sense of anger and fear over Obama’s intentions. In his talk Monday night, Bibi had a chance to put the thousands of pro-Israel supporters at ease, as the president sought to do the day before, but he chose not to, instead injecting again the concern about being threatened with “indefensible” borders.

His speech to Congress on Tuesday was very well received, and made Israel’s case eloquently. But it’s the president, more than members of Congress, who shapes foreign policy.

The good news or bad news, depending on your Mideast politics, is that Obama has made no mention of any new effort to restart the troubled and long-delayed negotiations, indicating that he is turning his attention to other world problems. The storm has passed, and in the end, little of substance regarding the Mideast impasse will result from all the heated rhetoric of the last week.

All the more reason why Bibi should have responded positively to the president’s speeches instead of reinforcing his image that he — rather than Abbas — is the Mideast’s Dr. No.

Abbas has chosen peace with Hamas (for the immediate future, at least) over a chance for peace with Israel. And Bibi has chosen confronting Obama rather than working at restoring their relationship. I hope it’s not a permanent mistake.