But these setbacks pale in comparison to the coming diplomatic tsunami.
The Palestinians have seized the diplomatic initiative and Israel is flailing hopelessly, trying to impose old patterns on a new paradigm. Despite the best efforts of the Israeli foreign ministry it seems certain that, later this month, the United Nations General Assembly will vote overwhelmingly to recognise an independent Palestine as the UN's 194th member state.
The move has ironic echoes of Resolution 181 in November 1947, when the UN voted to partition Palestine into Jewish and Arab states. The vote will have to be ratified by the Security Council. The United States, one of the permanent five members with veto powers, has said it will not support the statehood bid. For the moment at least, the quasi-statelet of Palestine will continue in its present limbo; not yet a proper country but much more than an occupied territory.
The prospect of Palestinian recognition has provoked near-panic in Jerusalem. For even if the USA uses its veto, recognition will be a massive moral, diplomatic and political victory for the Palestinians. As Mahmoud Abbas, the President of the Palestinian Authority, argued in the New York Times, "Palestine's admission to the United Nations would pave the way for the internationalisation of the conflict as a legal matter, not only a political one. It would also pave the way for us to pursue claims against Israel at the United Nations, human rights treaty bodies and the International Court of Justice."
Israel will have to explain why it operates an apartheid-like system of separate roads and water supplies for its own citizens that is off-limits to the indigenous population. Israel's tortuous legal arguments that attempt to justify the prevention of a viable, contiguous Palestinian state through the appropriation of Palestinian land will collapse. The momentum behind the growing international boycott movement will be given a veneer of legitimacy by any General Assembly vote to recognise Palestine.
Even if the USA does use its veto, President Obama and his officials have made no secret of their exasperation and irritation with Benjamin Netanyahu's government. Robert Gates, the former US secretary of defence, told Obama that Netanyahu was not only "ungrateful" for American support but was endangering Israel by refusing to deal with its growing diplomatic isolation and the demographic challenges of the West Bank.
Palestinian expectations will have to be met before long
Yet there is a way for Israel to change the diplomatic dynamic, seize the initiative and dictate the agenda instead of simply reacting to events. It should not only vote in favour of recognising Palestine; it should be the first country to do so, and welcome its neighbour to the community of nations.
Such a move would confound all its critics and, by turning accepted wisdom on its head, would break the diplomatic logjam.
Nor would recognising Palestine be as outlandish as it may sound. Israeli and Palestinian politicians and officials already meet regularly at tables decorated with both nations' flags. Israeli and Palestinian security forces co-operate successfully on tracking extremists and preventing terrorist attacks.
The West Bank has been comparatively calm and stable for the last few years. The Palestinian economy's rapid growth is partly founded on its growing trade relations with Israel. An increasing number of Israeli businessmen and women are keen to boost economic links, a desire shared by the nascent Palestinian middle class. Even the Islamist Hamas regime in Gaza depends on Israel for much of its electricity, fuel and food supplies.
Some argue that the Palestinian push for statehood at the UN will create "unrealistic expectations", which will further destabilise the region, as legions of protestors storm Israeli checkpoints and settlements in Palestine's own version of the Arab spring. Yet the Palestinians' expectations of statehood, which are entirely legitimate, will have to be met sooner rather than later. The founding of a Palestinian state will not happen according to a timetable written in Jerusalem, but in Ramallah, which is already Palestine's de facto capital.
The Palestinians have already cleverly appropriated the Zionist action plan, quietly building up their institutions and economy, garnering international support to be declared at the United Nations.
Now is the moment for Israel to change course, welcome a newly independent state of Palestine with which it can live in peace and stability, and remember the words of Theodor Herzl, the founder of political Zionism: "If you will it, it is no dream."
Adam LeBor is the author of "City of Oranges: Arabs and Jews in Jaffa"