Following a surprising speech in which he uttered the words “Palestinian state” for the first time, Israeli Prime Minister Benjamin Netanyahu has strengthened his standing at home and abroad, far exceeding expectations from all quarters.

Though last week’s address received only modest coverage in the United States, it has already shifted the dynamics of the inevitable “peace talks.” Contrary to the media’s conventional wisdom, however, Israel’s stronger negotiating position actually increases the odds of genuine, measurable progress for the Palestinians in the near term.

Emphasizing that positive steps could be taken almost immediately, a high-ranking Knesset staffer used a football analogy to explain that the Obama administration now has important question to answer: “Do they want to go for a Hail Mary pass, or will they be happy moving the ball forward?”

No amount of bromides and wishful thinking can change the reality that a “permanent” agreement has never been within reach. Israel, of course, has long been willing to make painful concessions, and the broader public still supports some form of a two-state solution. What has been lacking, though, is a willing partner on the other side of the bargaining table.

Former Palestinian leader Yasser Arafat famously walked away from a generous deal in July 2000 that offered him almost his every request. Shortly thereafter, he ushered in the so-called intifada, an unprecedented campaign of suicide bombings targeting Israeli civilians in buses, markets and cafes.

Since then, matters have sadly deteriorated. Palestinians suffer not just a crisis of leadership, but also a crisis of culture. Thanks to the dogged efforts of groups such as Palestinian Media Watch and Middle East Media Research Institute, we know that Fatah in the West Bank and Hamas in Gaza miss no opportunity in textbooks or television to poison the minds of parents and children alike.

It is little wonder that terrorism remains more popular with Palestinians than does peaceful coexistence with a Jewish state.

Much has been made—correctly—about Netanyahu’s insistence that any future Palestinian state be de-militarized and accept Israel as Jewish, but two other provisions in his speech likely will be the initial focal points as soon as talks start.

In calling on the Palestinians to “turn toward peace ... in educating their children for peace and in stopping incitement against Israel,” Netanyahu brought to the front-burner a subject largely ignored by the three prime ministers who served since his last term ended ten years ago. Here Western governments actually possess substantial leverage, as it is their taxpayers’ money that underwrites most Palestinian education and media.

Parallel to curbing indoctrination is Netanyahu’s idea of “economic peace,” which would entail fortifying the Palestinian economy and re-building the institutions of civil society. Advisors to the Israeli prime minister believe that conditions on the ground—culturally, politically, economically—must improve before the Palestinian society will be ready to embrace peace with Israel. Continued...