It was not in itself especially surprising when the US announced this month that it no longer regarded Israeli settlements in the occupied territories as illegal.

The move approved by President Donald Trump – and announced by his secretary of state, Mike Pompeo – was consistent with other policy shifts emanating from the Oval Office in recent times: the US recognition of Jerusalem as Israel’s capital, its annexation of the Golan Heights and a range of other steps hostile to the Palestinians – including closing their mission in Washington and slashing aid to the UN refugee agency UNRWA.

Still, it did not pass unnoticed. Israel’s Prime Minister, Binyamin Netanyahu, offered lavish thanks to the White House – before being formally indicted on corruption charges. It was also welcomed by his rival, Benny Gantz, leader of the new Blue and White party which, like Netanyahu’s Likud, had just failed to form a government following the country’s second election this year. The powerful settler movement expressed its gratitude as well.

Otherwise reactions were predictably negative. Palestinians immediately denounced Trump. The European Union issued a strongly-worded statement repeating its long-standing position that settlements were in violation of international law. Russia responded similarly. Pro-American Arab states like Saudi Arabia issued a strong rebuke. Egypt and Jordan, which both have long standing peace treaties with Israel, did the same.

Trump’s statement was blamed on his ambassador to Israel, David Friedman, widely regarded as a loyal supporter of the 600,000 Jewish settlers who now live in the West Bank and East Jerusalem. Friedman is also seen as a key figure in what the president has described as the “deal of the century” that his son-in-law Jared Kushner hopes to strike – in theory at least - between Israel and the Palestinians.

The fear is that the practical consequences of the president’s move will be to encourage Netanyahu – or if he is now finally on his way out, future Israeli prime ministers – to unilaterally annex parts of the West Bank. Netanyahu has pledged to do that but has so far refrained from doing so. On the eve of September’s election he promised to apply Israeli law to what the Oslo agreement define as Area C – 60% of the occupied territory.

Trump’s latest policy shift also played directly into America’s divisive domestic politics. Democratic candidates for the presidency have different positions: Elizabeth Warren, Bernie Sanders and Pete Buttigieg have all suggested that if elected they would use US aid to Israel as a form of pressure to achieve a solution that would be acceptable to the Palestinians. Joe Biden, however, made clear that he would not.

In the background are significant changes in American liberal Jewish opinion – as well as a clear split amongst Democrats. “There is a faction, powered by young and progressive activists, which sees Netanyahu as Trump, the (lobbying organisation) AIPAC as the National Rifle Association, and the occupation as a moral obscenity subsidized by American money,” wrote Peter Beinart in Forward.

It is fashionable to blame Trump for the destructive, taboo-breaking steps he has taken on the world stage. But it is important to draw attention to Barack Obama’s prior failures in the Middle East. Aaron David Miller and Daniel Kurtzer, both former senior state department and White House officials, penned a joint article admitting that presidents from Jimmy Carter to Obama had “essentially turned a blind eye” to the illegality of Israel settlements.

Democrats argue that whoever their presidential candidate turns out to be the settlement decision will be reversed in line with Washington’s long-standing commitment to international law. But critics warn that a far more robust policy will be required if Israel is to change tack.

Trump’s move has also revived debates about what others can do to keep alive a glimmer of hope about the possibility of a negotiated solution to the world’s most intractable conflict. One long-standing argument suggests that Britain should work with EU member states and recognise the State of Palestine, as first declared by Yasser Arafat at the height of the first intifada in 1988. Some diplomats are nervous about that, warning that they might suffer the fate of Sweden, shunned and isolated by Israel when it recognised Palestine in 2014. Others counter that there is safety in numbers – and that it is the right and principled thing to do.

Still, it is hard to imagine than any future Israeli government will agree to evacuate 600,000 settlers or even a significant fraction of that number, with the country’s main political parties now in agreement on this new consensus. Trump clearly intended simply to serve his own political and personal interests – and reward his loyal and beleaguered friend Bibi. But the president’s legacy – even if he turns out to serve only one term – will be to deepen Israel’s conflict with the Palestinians and make it harder than ever to manage in the future.

Ian is a former Middle East editor, diplomatic editor and European editor for the Guardian newspaper. In recent years he has reported and commented extensively on the Arab uprisings and their aftermath in Syria, Libya and Egypt, along with frequent visits to Iran, the Gulf and across the MENA region. His latest book, a new history of the Palestine–Israel conflict, was published in 2017 to mark the centenary of the Balfour Declaration and the 50th anniversary of the 1967 war. He has an MA in history and social and political science from the University of Cambridge and a PhD in government from LSE. Ian has written for the Economist, the Washington Post and many other publications, and is a regular commentator on TV and radio on Middle Eastern and international affairs. He wrote the introduction to The Arab Spring: Revolution, Rebellion and a New World Order (Guardian Books, 2012); Israel's Secret Wars (Grove Press, 1991), Zionism and the Arabs, 1936–1939 (Taylor & Francis, 1986, 2015); and contributed to the Encyclopedia of the Modern Middle East and North Africa (Macmillan Library Reference, 2004). His most recent book is Enemies and Neighbours: Arabs and Jews in Palestine and Israel, 1917-2017 (Allen Lane, 2017).