The conundrum was laid out clearly by Tzipi Hotovely, a young political ally of Netanyahu’s recently appointed to oversee the foreign ministry on his behalf.

She called together the country’s chief diplomats last week to cite rabbinical justifications for taking Palestinian land. Her broader message was that Israeli embassies abroad needed to stop worrying about being “smart” and concentrate instead on being “right”. Urging the country’s envoys into a headlong confrontation with the world community, she told them the “basic truth” was: “All the land is ours.”

Netanyahu is too experienced a politician to take Hotovely’s advice fully to heart himself. Having briefly spoken his mind to ensure he won the recent general election, he has now walked back a comment much criticised by the White House that he would never permit a Palestinian state.

Damage control was also the reason he quickly cancelled defence minister Moshe Yaalon’s plan to create separate buses for Jewish settlers and Palestinian labourers as they return to the occupied territories at the end of a day in Israel.

Unlike most in his cabinet, Netanyahu understood that, denied by his military of even the flimsiest security pretext, the historical antecedents of bus segregation were too uncomfortable, especially for Israel’s patron, the United States.

The graver danger for Netanyahu is that, stuck with a cabinet of the like-minded – of ultranationalists, settlers and religious extremists – he lacks a solitary fig leaf to soften his image with the international community.

In his two previous governments, he relied on such sops: Ehud Barak, his defence minister, followed by Tzipi Livni as justice minister became the sympathetic address in the Israeli cabinet craved by Washington and Europe. Both spoke grandly about Palestinian statehood, even while they did nothing to achieve it.

With no veteran of the peace-process to hand, the west now faces an Israeli foreign ministry led jointly by Hotovely and Dore Gold, appointed director-general this week. Gold, a long-time hawkish adviser to the prime minister, is deeply opposed to Palestinian statehood, and even floated two years ago the idea of annexing the West Bank.

The minister in charge of talks with the Palestinians – hypothetical though such a role is at the moment – is Silvan Shalom, another Netanyahu intimate who publicly rejects the idea of two states and supports aggressive settlement building.

Other key ministries affecting Palestinian life are similarly burdened with righteous – and outspoken – extremists.

Shortly before announcing his bus segregation plan, Yaalon suggested that Israel, in dealing with Iran, might ultimately follow the example set at the end of the Second World War by the US, as it dropped nuclear bombs on Hiroshima and Nagasaki.

Yaalon’s deputy, Eli Ben Dahan, a leading settler rabbi, refers to Palestinians as “sub-human”.

Ayelet Shaked, who spoke in genocidal terms against Palestinians in Gaza last summer, calling them “snakes”, now oversees Israel’s justice system, the sole – and already feeble – form of redress for Palestinians struggling against the occupation’s worst excesses.

Other ministers are no less dogmatic in their fanatical opposition both to Israel signing an agreement with the Palestinians and to the US signing one with Iran. The self-evident absurdity of diplomacy in these circumstances may be one reason why Tony Blair, the already deeply ineffective Middle East peace envoy, threw in the towel this week.

Similarly, Barack Obama is certain to find the new Israeli government an even bigger headache than Netanyahu’s previous two.

While the US tries to reach a deal on Iran’s nuclear programme and revive peace talks between the Palestinians and Israel – however futile such a process may be – Israeli ministers will be in a contest to see who can make most mischief.

Netanyahu, already an unloved figure at the White House, will now find no one across the Israeli cabinet table helping him to apply the brakes.

The irony is that, just as the White House gears up for another 18 months of humiliation and sabotage from Netanyahu and his government, Obama is showering Israel with gifts, as part of its long-standing “security” doctrine.

Last week, it was reported, the US agreed to provide Israel with $2 billion worth of arms, including bunker-buster bombs and thousands of missiles, to replenish stockpiles depleted by Israel’s sustained attack on Gaza last summer that killed more than 2,000 Palestinians.

The news broke just as United Nations officials reported that unexploded ordnance was still claiming lives in Gaza nearly a year later.

According to the Israeli media, the US is also preparing to “compensate” Israel with other goodies, including possibly more fighter planes, if Netanyahu agrees to restrain his criticisms over an expected deal with Iran in June.

And Washington averted last week a threat to Israel’s large, undeclared nuclear arsenal by blocking the efforts of Arab states to convene a conference to make the Middle East free of nuclear weapons by next year.

The lesson drawn by Netanyahu should be clear. Obama may signal verbally his disquiet with the current Israeli government, but he is not about to exact any real price from Israel, even as it shifts ever further to the fanatical right.