Donald Macintyre: A battle of wills lies ahead. For now, we have a beginning

Way back during the US Democratic primaries Barack Obama told a Jewish audience in Ohio that being pro-Israel did not mean signing up to every tenet of the country's biggest right-wing party, Likud. Since then, of course, the Likud leader, Benjamin Netanyahu, has become Prime Minister, and there was always bound to be heightened interest in the first meeting of the two men as heads of their respective governments.

It was expected that they would would emerge with smiles for the cameras. What was not expected was that the meeting would take more than three hours. It is a safe bet that whatever else, they were not merely exchanging pleasantries.

Western diplomats are convinced that there are at least two big differences between this administration and the previous one on the Middle East. The first is the collective knowledge of the Israel-Palestinian question in and around the White House. Secondly, it has been clear since President Obama took office that he is anxious to forge a better relationship with the Arab world than the invasion of Iraq – among other things – allowed George Bush to do.

There is no disguising the potential differences between the two men. They include the issue of Iran and its linkage to the Israeli-Palestinian question. Mr Netanyahu thinks US plans for dialogue with Tehran may fatally delay the application of the necessary pressure to stop it acquiring nuclear weapons. President Obama worries that Israel could launch a unilateral strike on Iran, which is why he dispatched the CIA chief Leon Panetta last month to warn Mr Netanyahu against "surprising" the US by doing just that.

Mr Netanyahu has been sceptical about a "grand bargain" in which he moves towards a deal with the Palestinians in return for an alliance including Arab countries against Iran's perceived ambitions to be a nuclear military power. But the President went a long way to endorsing that scenario last night, pointing out that peace with the Palestinians would reduce the threat posed to Israel by Iranian-backed Hizbollah and Hamas. Mr Netanyahu, who had up to last night indicated that Iran must come first, went no further than conceding the two could go together.

That said, there is a very long way to go. Mr Netanyahu's insistence, repeated last night, that the Palestinians recognise Israel as a Jewish state, will be seen by many in Washington as a delaying tactic. Just how serious the US President is about achieving the Israel-Palestinian peace which has eluded his predecessors for 40 years may become more apparent in Cairo on 4 June. Either way, there is already what Zalman Shoval, an adviser to Mr Netanyahu, called an "an unavoidable landmine" relating to Jewish settlements in the occupied West Bank. The US wants a complete freeze: while promising no "new" settlements, Israel sees nothing wrong with continued building in the West Bank and East Jerusalem.

Last night, Mr Netanyahu again did not use the words "Palestinian state", saying, less than convincingly, that if negotiations were substantive the "terminology" would take care of itself. Yesterday was the beginning of a process, perhaps as much on Iran as on the Israeli-Palestinian conflict; assuming the President is as determined as he seems, a battle of wills lies ahead.