Jerusalem (CNN) The Israeli Prime Minister stood before a crowd of journalists, a collection of reporters from the foreign press, gathered for an annual civil New Year's toast.

Benjamin Netanyahu, standing in a navy blue suit and red tie -- not quite as bright as the tie that has been a staple of President Donald Trump's wardrobe -- was the keynote speaker.

He began by speaking about the importance of an open and free media, then railed against the foreign media for their coverage of current events in the region.

It was a mixture of condescension and confrontation, laid out by a Prime Minister who is supremely confident in his position today.

He criticized the media's characterization of the Iranian regime as moderate. "I don't think there's anything moderate about jailing journalists," he said.

Israeli Prime Minister Benjamin Netanyahu, left, speaks with US President Donald Trump on May 23, 2017.

Then he lectured reporters on which stories they should be covering for their audience. "Covering these stories will inform your readers and viewers of vital information that will do a tremendous amount."

When he mentioned Trump's plan to move the US embassy from Tel Aviv to Jerusalem, a group of Netanyahu devotees seated in the front row began clapping.

"I hope some foreign journalists were applauding now," Netanyahu quipped.

Trump changes his tune

It's been one year into the Trump presidency and not even Netanyahu could have written the script better for himself. It seems everything is moving in his direction.

Nearly everything. There is still the matter of two criminal investigations in which the Prime Minister is a suspect, but even that seems like a distant worry as Trump's position shifts firmly into line with Israel's right-wing government.

Shortly after Netanyahu visited Trump in Washington -- one of the first leaders to do so -- I wrote that the honeymoon between the two leaders was over . I was wrong.

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Initially, Trump wanted Israel to "hold back" on settlement construction while he pursued the "ultimate deal" and an end to the Israeli-Palestinian conflict. Netanyahu's government, which is proud of its right-wing credentials, is not built for negotiations with the Palestinians, nor for making concessions in a peace process. Many ministers openly oppose the creation of a Palestinian state.

In the early months, the American and Israeli governments could not agree on a formula for settlement construction, piling even more pressure on Netanyahu.

That pressure has now all but disappeared, vanishing in a turbulent month-long period in the Middle East, which began with Trump's statement recognizing Jerusalem as the capital of Israel.

Trump's peace process, which was always more aspirational than corporeal, has run into the realization of its own impracticalities. The Jerusalem statement had the effect of sending Trump's plans off the rails. He attempted to blunt the effect of his decision by saying Jerusalem's borders and Israeli sovereignty in the city were still final status issues open for negotiations, but any nuance in his statement was immediately lost in a wave of anger. But then he jettisoned any nuance there might have been when he tweeted a few weeks later that Jerusalem was off the table.

The Palestinians have flatly rejected any offer the Americans may put forward, the leaked details of which are impossible for them to accept. In his speech at the PLO Central Council meeting earlier this week, Palestinian Authority President Mahmoud Abbas said the Palestinians would not accept Abu Dis -- a neighborhood adjacent to Jerusalem -- as their capital.

The short statement, tucked into the middle of a nearly two-hour speech, appeared to confirm reports that Trump's plan left the Palestinians without any part of Jerusalem, breaking with UN Security Council resolutions and the virtual international consensus. Abbas's speech was seconded by the Central Council, which reaffirmed that the PLO would not accept any solely American proposal. The Council called on the United Nations to take over the peace process.

Now the Palestinians are refusing to meet with any member of the Trump administration, shunning Vice President Mike Pence, due in the region next week, and Jason Greenblatt, Trump's Special Envoy for International Negotiations, who has in the past met multiple times with Palestinian leaders.

"The United States has moved from being a sponsor of the peace process, albeit a biased and unfair sponsor, to being a partner of the occupation," a senior PLO Executive Committee member told CNN.

Just this week, the Trump administration froze $65 million in funding to UNRWA, the United Nations agency dedicated to Palestinian refugees, a frequent target of Netanyahu's criticism. Two days later, the US State Department announced that it would be withholding $45 million in food aid from UNRWA, money a spokeswoman said was "pledged" in mid-December but never "committed."

'Total stalemate'

The Palestinian response has played right into the hands of Netanyahu, who immediately accused the Palestinians of repeated rejectionism. Netanyahu could easily commit to Trump's peace plan knowing he wouldn't have to make concessions, because there is no peace process on the horizon.

"At the moment, we have a total stalemate (between Israelis and Palestinians)," said Yehuda Ben Meir, head of the National Security and Public Opinion Project at Israel's Institute for National Security Studies. "There's no movement. If that's the situation, Netanyahu doesn't have any internal coalition problems, because nothing is going to move forward, and he does not have to make any difficult decisions."

The last few months have seen Netanyahu score one victory after another with the Trump administration.

The US recognition of Jerusalem as the capital of Israel was the biggest prize, but certainly not the only one. Criticism of settlement construction in East Jerusalem and the West Bank -- a given under previous administrations -- has been toned down considerably. Trump blasting the United Nations for a perceived systemic bias against Israel echoes many of Netanyahu's own talking points about the world body. And the President's plan to move the US embassy from Tel Aviv to Jerusalem is the proverbial icing on the cake.

Pence's visit to the region will be a double celebration, equally exciting for Israel's government and Trump's evangelical voter base.

The Israeli government may very well be the only government on earth loudly and openly celebrating Trump, and that doesn't perturb them in the slightest. Trump, who has shown himself able to offend entire continents , seems incapable of offending the Israeli government.

Palestinians sidelined

Meanwhile, the Palestinians find themselves distressingly short of options. Feeling abandoned by the United States, they have turned to the Europeans to take the lead on the pursuit of a two-state solution. But Europe hasn't hosted negotiations between Israelis and Palestinians in more than a decade.

A French effort to bring the two sides together in late-2016 fizzled into promises of economic incentives for both sides. Speaking with CNN, an EU official stressed the importance of keeping both sides "engaged," but offered few ideas on how that will happen.

"No one wants to impose anything to anyone here," the official said.

For those Arab states, the Palestinians are increasingly a peripheral issue, marginalized by bigger regional conflicts. Saudi Arabia's attention has turned to Iran, while Egypt is focused on suppressing an insurgency in Sinai.

The Palestinian Authority is struggling for relevance in the Middle East and is feeling unloved. In his Central Council speech, Abbas even targeted the Arab states -- though none by name -- as he lashed out at nearly every player in the region.

"We do not interfere with the affairs of Arab countries and we do not accept anyone to interfere in our affairs," he said. Abbas blasted one country in particular -- once again without naming it -- accusing it of undermining the Palestinians, saying: "Stay away from us."

The swipe was likely directed at Saudi Arabia, where Crown Prince Mohammed Bin Salman is seen as receptive to Trump's peace plan.

The senior PLO official confirmed the implication. "The Saudis have transferred messages from the Americans to us. We consider those messages unacceptable. Along with the messages, they pass along indirect threats as well; though the Saudis always say, 'It's your decision,'" he said, striking a quiet but defiant tone.

Abbas's leadership tested

Abbas's Central Council speech was peppered with colloquial Arabic; it was not a speech laying out a new Palestinian foreign policy, or setting a new course for the PLO. Rather, it was message to his domestic audience.

Ever the bureaucrat, the Palestinian leader has often been accused of lacking charisma, leaving him increasingly unpopular on the Palestinian street, as he enters the 13th year of what was meant to be a four-year term. With little leverage to influence the regional players, Abbas spoke to his own people, trying to shore up his flagging support.

"In the broader Arab world, his nominal allies are not picking up for him as much as he would have liked or would have hoped," said Grant Rumley, a research fellow at the Foundation for Defense of Democracies and author of "The Last Palestinian," a biography of Abbas. "He's back to battening down the hatches and trying to wait out the storm."

"Ultimately, because he doesn't have any other options and because he doesn't have the allies in the Arab world to fall back on, I think that with enough pressure, he'll come back to the table," Rumley predicted, though such a reversal seems unlikely any time in the near future.

Abbas's outbursts, punctuated with waving hands and an angry scowl, were more red meat for Netanyahu, who seized on Abbas's claim that Israel was a European "colonial enterprise" that had nothing to do with Judaism. Abbas practically wrote Netanyahu's talking points for him, soon to be echoed by Trump and US Ambassador to Israel David Friedman.

Concerns about Trump that were only whispered when he first took office are now the regular focus of PLO messages. The relationship between Trump and Abbas now resembles the relationship between Obama and Netanyahu. The two leaders paid each other respect as long as they had to, despite frequent murmurs of discontent. But once there was no need to feign civility any longer, Netanyahu slammed Obama in much the same way Abbas is going after Trump.

Israeli-Palestinian problems unaddressed

A sudden surge in overt American political and diplomatic support for Israel has not solved the country's bigger problems. If anything, it has only delayed them being tackled.

Netanyahu emphasizes Israel's need to maintain security control of the entire West Bank in any final status agreement, but he has yet to put forward a clear solution of what to do with the two million Palestinians who live there. Or the two million more in Gaza, which is under an Israeli blockade.

Israel's right-wing government, empowered by Trump, has increased calls for the annexation of all or parts of the West Bank, while Netanyahu refuses to reaffirm his earlier commitment to a two-state solution. Within 10 days of Trump's inauguration, Israel approved 6,000 new housing units in the West Bank, as well as the first entirely new settlement in two decades. Additional approvals slowed temporarily, but have recently picked up again.

Such moves amplify the criticism from some quarters that Israel is starting to resemble an apartheid state, exacerbated by the lack of a clear vision from the Israeli government on how to treat Palestinians equitably.

Those concerns seem far off to Israel's government now, if they're a concern at all. Elections aren't scheduled until late-2019 -- an eternity in domestic politics. Netanyahu treats Trump with a mixture of flattery and devotion. Trump himself handles Israel as the beloved child.

The governments of the United States and Israel have found each other, even if they've lost so many others along the way.