Virtually unnoticed, U.S. President Barack Obama and Israeli Prime Minister Benyamin Netanyahu have quietly set the stage to move forward Israeli-Palestinian peace talks,mend their tense personal relations and build a working relationship that takes the legitimate interests of their two countries into account.

In a series of low-key moves, both men have worked to ensure that their meeting today at the White House demonstrates improved relations since Netanyahu last visited Washington in March. Differences then over Israeli settlement policy in Jerusalem produced one of the tensest moments in U.S.-Israeli relations in recent history. Netanyahu canceled subsequent talks scheduled for June 1 because of the international storm sparked by the Gaza flotilla assault.

To push peace talks with the Palestinians forward, Obama needs Netanyahu to agree to an extension of Israel's declared 10-month freeze of settlement activity in the West Bank as well as of the undeclared halt in East Jerusalem. In recognition of the Israeli concession, Obama recently agreed to fund deployment of anti-rocket systems in Israeli border towns to the tune of $200 million. But a recent campaign to accelerate settlement in the West Bank and Golan Heights by Nefesh B'Nefesh, an Israeli government-funded organization that helps new immigrants to settle in Israel, demonstrates how tenuous the freeze is. 

In addition to an extension of the freeze, Obama seeks closer U.S.-Israeli political and military coordination to prevent the fallout of Israeli operations -- such as the flotilla incident -- from putting the U.S. in difficult diplomatic situations. In this, Obama can build on the support he showed for Israel in the wake of the flotilla interception, when he effectively blocked demands that any inquiry into the incident be controlled by the United Nations. Obama also shielded Israel from condemnation by the U.N. Security Council, and helped Israel reshape the Gaza embargo, which had become unsustainable after the flotilla assault. As a result, the political storm has been calmed to such a degree that Iran in recent days canceled its plans to escalate the situation by sending ships of its own to break the Israeli blockade.

Recognizing that Obama will seek to extract a price for his demonstrated support, Israel on Monday replaced its blanket blockade of Gaza with a list of items that it will not allow into the strip as well as goods that will be permitted under supervision of the international community. The list goes some way to alleviating concerns that Gaza has been unable to rebuild after last year's devastating Israeli attack that unsuccessfully sought to unseat Hamas, the Islamist rivals of Palestinian President Mahmud Abbas. But it falls short of Palestinian demands for a complete end to the siege.

U.S. officials hope that the gesture represents an acknowledgement by Netanyahu that Israel needs to solidify its ties to the Obama administration to ensure that it is not further isolated should current efforts by U.S. special envoy George Mitchell to revive the peace talks fail. The flotilla incident, which has brought Israeli-Turkish relations to the brink of rupture, also signaled the death of the policy of the periphery, a cornerstone of Israeli foreign policy by which Israel sought close relations with its neighbor's neighbors in lieu of formal ties with its neighbors. That policy was progressively eroded by the 1974 overthrow of Haile Selassie of Ethiopia, the 1979 toppling of the Shah of Iran, the peace treaties with Egypt and Jordan and finally the flotilla incident.

Of even greater concern to Netanyahu is a growing school of thinking in U.S. military and intelligence circles that believes that U.S. policy should seek to include Hamas in peace efforts. Meetings in the past year between active and retired U.S. and European officials and senior representatives of Hamas constitute a backchannel attempt to explore ways of drawing militant Palestinians into the peace process. In a little-noticed statement in May, Hamas said for the first time that it would permanently end its armed struggle in return for an Israeli withdrawal from the occupied territories. U.S. military and intelligence officials attribute significance to the Hamas declaration, but say it does not go far enough. These officials caution, however, that a credible Hamas denunciation of violence would receive international support and make Israeli settlement and negotiation policies untenable. 

To move Israeli-Palestinian talks forward, Obama will also have to bridge differences between Netanyahu and Abbas on how to do so. In return for an extension of the settlement freeze, Netanyahu wants negotiations to graduate from indirect talks supervised by Mitchell to face-to-face negotiations. For his part, Abbas insists that the two sides must first make progress in Israeli recognition of Palestine's future borders. In a bid to pressure Netanyahu, Abbas last week launched a campaign to win Israeli hearts and minds by appealing directly to the Israeli public to support a peace settlement. Abbas, backed by the Arab League, has also called for the deployment of an international force in the West Bank and Gaza under NATO or U.N. auspices. He told Israeli reporters that he and Netanyahu had recently exchanged maps based on his proposal.

Palestinian officials argue that Israeli acceptance of such a force would signal Israeli sincerity, enhance prospects for healing the rift between Abbas' Fatah movement and Hamas that has undermined efforts to achieve peace, and create a more popular base for internationally funded reform efforts designed to build effective Palestinian institutions. In another gesture on the eve of the Obama-Netanyahu meeting, Palestinian Prime Minister Salam Fayyad and Israeli Defense Minister Ehud Barak met on Monday in the first such high-level meeting since February. In a statement afterwards, Fayyad said they discussed the lifting of the blockade of Gaza and the opening of crossings into the strip, as well as free passage between Gaza and the West Bank under European supervision.

In their meeting today, Obama and Netanyahu will try to build on these gains, while avoiding the kinds of unexpected spoiler events that have plagued their recent relations.

**James M. Dorsey, a former Wall Street Journal foreign correspondent, writes about ethnic and religious conflict.