So, now U.S. President Barack Obama can't understand what all the fuss was about last week.

To hear him tell it Sunday, in front of the powerful America Israel Public Affairs Committee, his explosive remarks last week about the borders of a future Palestinian state were "misrepresented." The controversy, he said, is "not based in substance."

Basically, he told Israel's worried supporters Sunday, everything's cool. I'm still onside. Don't worry.

The diplomatic fog, as is often the case, is deliberate. But let's try for a moment to cut through it.

First, here is the Obama remark that ignited all the uproar last Thursday: "We believe," declared the president, "the borders of Israel and Palestine should be based on the 1967 lines with mutually agreed swaps (of land)…."

The reaction was furious, and none was quicker than Israel's prime minister, Benjamin Netanyahu.

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U.S. President Barack Obama meets with Prime Minister Benjamin Netanyahu of Israel in the Oval Office at the White House in Washington, D.C., on May 20, 2011. ((Charles Dharapak/Associated Press))

In front of television cameras at the White House the next day, Netanyahu delivered a history lesson to the president, and an absolute rejection of the proposal.

He called a return to the 1967 lines — basically, the lines that defined Israel before the Six Day War in 1967 — "indefensible." Israel has certain security needs, he told Obama. It needs the Jordan Valley. And of course there are what Netanyahu called "certain changes that have taken place on the ground, demographic changes that have taken place over the last 44 years."

'Facts on the ground'

That is a euphemism for Israel's settlement building in the West Bank and in East Jerusalem, both of which lie across the 1967 lines. Israeli leaders have repeatedly characterized those settlements as creating "facts on the ground." Illegal facts, according even to Canada's staunchly pro-Israel government, but facts nonetheless.

And they were created, in part, to make precisely the argument Netanyahu put forward Friday. In a Western court of law, citing a reality you yourself created in order to argue that a certain proposal risks altering the status quo just wouldn't work. But diplomacy is different.

But could it be that Netanyahu was right? That there was in fact something new going on: A U.S. president attempting to basically define the borders of a future Palestinian state?

No, Obama said Sunday. Quite the opposite, in fact. Because he'd added the phrase "with mutually agreed (land) swaps," Israel has nothing to worry about.

"By definition," he said, "it means that the parties themselves — Israelis and Palestinians — will negotiate a border that is different than the one that existed on June 4, 1967," he told AIPAC.

The line drew loud, relieved applause.

But it begs Question No. 1: If Obama’s declaration represented no substantive change, what was Netanyahu so worked up about?

The answer is obvious. By invoking the 1967 lines, something no president has ever done publicly, Obama applied a cattle prod to the Israelis. He created an impression, while using wiggle words that allow him to deny he was changing the American position.

The matter of Jerusalem

Clearly, Obama and the rest of the so-called "Mideast quartet" — which immediately endorsed his speech — are sick of the endless, seemingly pointless "peace process." They want things to move along.

Then there’s the matter of Jerusalem. This would be the same Jerusalem that presidential candidate Obama, in a 2008 speech to AIPAC, referred to as the "capital of Israel," which "must remain undivided."

He didn’t repeat that applause line on Sunday, probably because the 1967 lines run right through the middle of the Holy City.

And if the land swaps caveat is Obama's proposal to keep East Jerusalem in Israeli hands, well, it's hard to imagine the Palestinians trading what they regard as their future capital for some land somewhere else.

So, Question No. 2: How exactly does the "1967 lines" proposal deal with the crucially important, and practically sacred, question of Jerusalem?

But there is something else that hangs over all this uproar, and which might actually be the reason for it all.

The Palestinians intend to move a vote this fall at the United Nations for support of a unilateral declaration of statehood.

Mahmoud Abbas, the current Palestinian leader, has been on the move almost constantly in the past year, building support for the initiative among UN member states.

Tired of endless negotiations

I spoke Friday to an Israeli official travelling with Netanyahu. He said Israel is convinced the vote will carry at the UN General Assembly. Israeli Defence Minister Ehud Barak has called it a "diplomatic tsunami." A prominent member of Netanyahu’s Likud party authored an article in the New York Times last week predicting the vote will pass and suggesting Israel retaliate by declaring outright sovereignty over most of the West Bank.

Right now, though, Israel's first big concern is how many Western democracies will vote yes at the General Assembly. The Israelis can count on the U.S. and Canada to vote no, but a lot of European nations, said Netanyahu’s official, are sick of the endless negotiations, and are wavering.

A large number of yes votes by Western democracies in the General Assembly would be an embarrassment to Israel.

Nonetheless, Obama declared Sunday that the vote will fail: "No vote at the United Nations will ever create an independent Palestinian state. And the United States will stand up against efforts to single Israel out at the United Nations or in any international forum."

Meaning, presumably, that the U.S. will, if it has to, use its veto in the end to block the move at the Security Council.

That, said Netanyahu's man, would be bad: A Palestinian state prevented from coming into existence solely by Israel's greatest patron, in defiance of the world. Israel, said the official, needs a "moral victory" involving a lot more powerful no votes.

He said Israel believes Obama’s "1967 lines" proposal may be meant to throw the Palestinians a bone in the hopes they will drop the UN initiative.

In fact, he said, the proposed UN vote is based on the 1967 lines, so Obama’s declaration will if anything encourage the Palestinian drive.

Clever initiative

And as much as the U.S. and Israel publicly deride the UN initiative, it is a clever one: The Palestinians are deliberately imitating the way Israel came into being after 1948.

The recent unity deal announced by Abbas’s Fatah party, which governs the West Bank, and their mortal enemies in Gaza, Hamas, is all part of the UN drive.

The Palestinians can now claim a single government. And to accusations that they've absorbed terrorists, they can point to the fact that David Ben-Gurion, Israel’s first prime minister, absorbed both Irgun and the Lehi Group, which were accused of terrorism by Britain and by the UN for their attacks on civilians. Israel pardoned Lehi, and former members of both groups subsequently became Israeli prime ministers.

So, Questions No. 3 and 4: Can the U.S. and Israel’s other allies derail the September vote? And will Hamas be stupid enough to continue its dogmatic insistence on Israel’s destruction, which if it remains unchanged will likely hobble Abbas’s UN drive?

The Middle East, as Obama noted twice in the past few days, is changing rapidly.

Question No. 5: Is the change going to be far more rapid, and potentially explosive, than any of us realized?