Mr. Netanyahu is not feeling well lately, and for good reasons.

"Quite unfortunately Netanyahu's worldview is fixated on the equation that 2013 (like all the years before that) were 1938; that Iran is Nazi Germany and that those willing to engage with Iran diplomatically are like Chamberlain in 1938 Munich." These are Israeli observers who are warning their Prime Minister that when it comes to Iran he is out to lunch. "Jerusalem's growl in response to the Iranian charm offensive is just the latest episode in classic Israeli PR boomerangs," observes another. "Israel's new Iran policy is the stick and the stick," declares another Haaretz opinion piece, adding, "Netanyahu has nothing new to say—not about an agreement with the Palestinians, not about relations with Iran, not for Israel's middle class and certainly not for its poor."

All the indications from Tel Aviv to Washington and New York are that Netanyahu and his thinking about the Iranian so-called "nuclear threat" is in deep trouble. The New York Times has even chimed in and warned that "it could be disastrous if Mr. Netanyahu and his supporters in Congress were so blinded by distrust of Iran that they exaggerate the threat, block President Obama from taking advantage of new diplomatic openings and sabotage the best chance to establish a new relationship since the 1979 Iranian revolution sent American-Iranian relations into the deep freeze."

The fact is that both Netanyahu and the entire Zionist project he represents have been outmanoeuvred by the wily and persistent conundrum of the Islamic republic; a state he has spent the last decade positioning as his primary foe. But in the aftermath of the US-led invasions of Afghanistan (2001) and Iraq (2003) and then the rise of the Arab revolutions (2011), it is not just Netanyahu, but the whole Zionist belligerence that is in deep trouble.

In the heat of the Cold War Israel as a European settler colony consistently shifted gears, and categorically abandoned its initial socialist aspirations, as the Israeli garrison state worked itself up into the critical position of a hardware in the US imperialist military machinery, at the expense of any meaningful, just, and enduring resolution of the Palestinian issue definitive to finding a way to weave the life of some seven million Jewish Israelis in the democratic future of the region in which they live.

That strategy of becoming integral to US militarism had worked well until the rise of the Arab revolutions when the entire political calculus of the region began radically to change. Now that in the aftermath of the rise of the Green Movement in Iran (2009), a far more conciliatory Rouhani administration has put forward an aggressive diplomacy of reconciliation with the US, Israel under Netanyahu's leadership finds itself in deeply troubling waters. Israel now faces a formidable adversary in the Islamic republic—an adversary who is not threatening it (contrary to all propaganda hype) with nuclear annihilation but with smarter navigational skills in the geopolitics of the region.

Street-smart in the age of asymmetrical warfare

Over the last thirty years plus, as Israel has taken more of Palestine and correspondingly made itself indispensable to US imperial design for the region, Iranians have been busy doing something entirely different. They have made themselves definitive to grassroots organisational inroads in every single terrain the US and Israel have left in ruins—from Afghanistan to Iraq to Lebanon to Palestine, and now deep into Syria, Bahrain, and Yemen. In the age of soft power and asymmetrical warfare, Iranians have vastly outsmarted and outmanoeuvred the Israelis. They have things in their smart arsenal of geopolitics entirely absent from the Israeli wherewithal. When Zarif sits across the table from Kerry he can offer him things he cannot refuse. The "nuclear issue" is a red herring.

The fact is that Iran can offer Obama's second and final term of presidency far more than Israel can. Israel can offer very little—almost nothing except false and falsifying intelligence and sporadic and useless targeted assassination of Iranian scientists and/or military targets inside Syria. This is the age of soft power and asymmetrical warfare. Israel is crippled on that front. Israel wrote its future too much into the violent working of a brute military machinery that it saw as its protectorate. The Islamic republic, meanwhile, grew robust and street-smart in the back allies of the troubled region from Afghanistan to Iraq to Lebanon, Palestine, Bahrain and Yemen, in neighbourhoods where the political alphabet of soft power and asymmetrical warfare are spelled out, and where the Israelis and their entire security, intelligence and military apparatus are illiterate and useless.

Iran on the other hand can offer Obama far more—they can help him in Afghanistan, in Iraq, in Lebanon, in Palestine, in Syria, in Bahrain, and in Yemen and beyond. Obama knows this fully, and so does Netanyahu. It is not accidental that Netanyahu opted to "carpet bombed Western diplomacy," as Haaretz put it, while Kerry thinks it would be "Diplomatic malpractice not to engage Iran." Obama is thinking of his name in history, while Netanyahu is uncertain of his immediate political future.

It is not accidental either that soon after he returned from the UNGA in New York, Netanyahu took full advantage of an infomercial that BBC Persian offered him to try to win "the minds and souls" of Iranians (it backfired and the entire debacle has become the butt of a joke both for Netanyahu and for the misguided BBC Persian)—for he too knows the weak spot of the ruling regime in Iran.

Whereas they are the strongest in the geopolitics of the region, the ruling regime in Iran is the weakest on their domestic fronts, where over the last thirty years of sustained criminal abuse of their own citizens they have shot themselves in the foot for the fear of losing control. Over the last three months or so there are signs of ever so measured liberalisation of the domestic scene. A few political prisoners have been released, access to the Internet is ever so gently being let loose, and more is promised to come, and the censorial policies of the repressive state apparatus are being unglued.

It still remains to be seen if these changes are for real or just cosmetic. If they are cosmetic no fancy footwork of President Rouhani on his Twitter account or Foreign Minister Javad Zarif on his Facebook page is going to fool a deeply cultivated political citizenry, but if they are by some miracle for real, and the regional soft power of the Islamic republic will eventually have the backing of a robust and liberated civil society, not just Netanyahu's political future but the whole apartheid apparatus of Israel is in deep trouble—and once and for all millions of Israelis will have to start writing their future into the democratic aspiration of the region in which they live.

Hamid Dabashi is Hagop Kevorkian Professor of Iranian Studies and Comparative Literature at Columbia University and the author of Arab Spring: the End of Postcolonialism (2011).