Israel's prime minister, Binyamin Netanyahu, wants to stay in power for as long as possible. He deploys a zero-risk strategy aimed at keeping his rightwing political base behind him, while convincing the public that he alone could lead the country in times of regional turmoil. This week, Netanyahu overcame a key challenge to his coveted political stasis. The deadline for US-sponsored Israeli-Palestinian talks passed, while Netanyahu's governing coalition remained intact.

Netanyahu missed an opportunity. He could have leveraged his unchallenged leadership to make headway towards peace, freed Israel from the moral and political burden of its endless occupation in the West Bank, and drawn the country's permanent borders. The Israeli public would widely support any peace programme endorsed by Netanyahu. And for the first time in his turbulent 30-year career, Bibi could have been the national hero, leading from the centre, rather than remaining the aloof master of PR.

But Netanyahu wasn't interested. Even when shown polls indicating that a peace breakthrough would make him extremely popular, he shrugged and kept looking to the right, to make sure his base was still there. The scar from his first term – when the left and far-right joined to topple him following the Wye River accord he signed with Yasser Arafat – wouldn't heal.

Recent attempts to make peace faced huge challenges. Since the collapse of talks at Camp David, in 2000, Israeli mainstream opinion has accepted the "no partner" narrative, which holds that the Palestinian leadership is not willing nor able to compromise. This belief has kept Netanyahu's policies unchallenged in Israel.

Two things were different this time. First, there was the unexpected energy and motivation of US secretary of state John Kerry. Second, the threat of boycott and sanctions against Israel moved from the fringe of the western left to the mainstream conversation, following the EU ban on funding for Israeli settlements. This created a potential stick to push Netanyahu toward flexibility.

But it wasn't enough to secure a deal. True to form, Netanyahu smiled at the American initiative, waiting to see whether Kerry carried a big stick or was merely on a freelance fishing expedition. When Kerry announced the resumption of talks in July 2013, the Israeli leader said that the two-state solution was important to prevent a "binational state". But soon enough, Bibi realised that Kerry lacked presidential backing, and Israel launched expanded settlements and launched a smear campaign against Palestinian President Mahmoud Abbas. Netanyahu's demand for Palestinian recognition of Israel "as a Jewish state" appeared to be a non-starter, blocking any progress.

The breaking point came with the issue of Palestinian prisoners, convicted for pre-Oslo terrorist murders, including 14 Israeli citizens. That was Abbas's price for the talks. The far-right party in Netanyahu's coalition threatened to leave if they were released. Theoretically, Netanyahu could have formed a different, pro-peace coalition, but he didn't want to repeat the Wye River experience. So he sided with the far-right and defaulted on the prisoner release, and Abbas responded in kind, by signing a reconciliation deal with Hamas. This prompted Netanyahu to call off the talks – and close ranks in his coalition, where even the moderates preferred to blame Abbas and keep their cabinet seats. President Barack Obama declared a six-month time out. Bibi was off the hook again.

Then came the latest, unexpected act. Following his failure, Kerry was recorded warning that without a two-state solution, Israel risked becoming an "apartheid state". After a day of uproar fuelled by the pro-Israel lobby Kerry issued a mild expression of regret, but it couldn't erase the effect: the dreaded a-word has entered the room, and it's now there to stay.

Netanyahu avoided the political risk of peacemaking, and kept his coalition together. But eventually, he won't escape the deeper strategic question: how to prevent the risk of a binational state, and save Israel's democracy and Jewish character, now that the door of negotiations is shut.