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.

What is not likely to be a major sticking point in the near term is the issue that has generated the most attention in recent weeks: Israeli settlements. People close to Netanyahu believe that the highly publicized spat has been overblown, and any differences with the Obama administration will soon be resolved.

Most important was the impact the speech had on Netanyahu’s political standing inside Israel. Improbably, he garnered praise from the right and left; his approval skyrocketed 16 percent overnight.

His right-wing coalition was pleased that he didn’t cave to Obama on settlements or propose a Palestinian state that would be capable of attacking Israel.

Helping him most with shoring up support from the center and the left, though, was the shockingly coarse responses from across the Arab world to Netanyahu’s insistence that Israel be recognized as Jewish. Presumably speaking on behalf of moderate Fatah leader and Palestinian Authority President Mahmoud Abbas, chief Palestinian negotiator Saeb Erekat said flatly, “In a thousand years, no Palestinian leader will accept this.”

“If they won’t accept us as a Jewish state, then when will they ever accept us?” asked Shmuel, a 70-year-old native Israeli who supported Oslo and has mostly voted for left-wing candidates. Such was the sentiment across Israel, where ordinary citizens are leery of making concessions to people who won’t even agree to their country’s right to exist.

Speculation that “peace” is now dead or hopelessly delayed misses the point. Oslo proved that a signed deal alone does not bring peace.

On the table now is the prospect of making life better for Palestinians, laying the necessary foundation for a future state that is stable and—most important—committed to peace.

For the sake of all parties, Obama should not waste this historic opportunity.