Israeli prime minister Benjamin Netanyahu has rarely been so politically embattled. His travails indicate the Israeli right’s inability to respond to a shifting political landscape, both in the region and globally.

The context for his troubles was his commitment in 2009, under great pressure from a newly elected US president, Barack Obama, to support the creation of a Palestinian state. It was a concession he never wanted to make and one he has regretted ever since.

The US secretary of state, John Kerry, has exploited that pledge by imposing the current peace talks. Now Netanyahu faces an imminent “framework agreement” that may require him to make further commitments towards an outcome he abhors.

Mahmoud Abbas, the head of the Palestinian Authority, is not helping. Rather than digging in his own heels, he offers constant accommodation. Last week Abbas told the New York Times that Israel could take a leisurely five years removing its soldiers and settlers from a key piece of Palestinian territory, the Jordan Valley. The Palestinian state would remain demilitarised, while Nato troops could stay “for a long time, and wherever they want”.

The Arab League is another thorn. It has obliged by renewing its offer from 2002, the Arab Peace Initiative, that promises Israel peaceful relations with the Arab world in return for its agreement to Palestinian statehood.

Meanwhile, the European Union is gently turning the screws on the occupation. It regularly trumpets condemnation of Israel’s settlement-building frenzies, including last week’s announcement of 558 settler homes in East Jerusalem. And in the background sanctions loom over settlement goods.

European financial institutions are providing a useful barometer of the mood among the 28 EU member states. They have become the unexpected pioneers of the boycott, divestment and sanctions (BDS) movement, with a steady trickle of banks and pension funds pulling out their investments in recent weeks.

Pointing out that boycotts and “delegitimisation” campaigns are only going to gather pace, Kerry has warned that Israel’s traditional policy is “unsustainable”.

That message rings true with many Israeli business leaders, who have thrown their weight behind the US diplomatic plan. They believe that a Palestinian state is the key to Israel gaining access to lucrative regional markets and continued economic growth.

Netanyahu must have been disconcerted by the news that among those meeting Kerry to express support at the World Economic Forum in Davos last month was Shlomi Fogel, the prime minister’s long-time intimate.

Pressure on these various fronts may explain Netanyahu’s hasty convening last weekend of his senior ministers to devise a strategy to counter the boycott trend. Proposals include a $28 million media campaign, legal action against boycotting institutions, and intensified surveillance of overseas activists by the Mossad.

On the domestic scene, Netanyahu – who is known to prize political survival above all other concerns – is getting a rough ride as well. He is being undermined on his right flank by rivals inside the coalition.

Naftali Bennett, the settlers’ leader, provoked a chafing public feud with Netanyahu this month, accusing him of losing his “moral compass” in the negotiations. At the same time, Avigdor Lieberman, the foreign minister from the far-right Yisrael Beiteinu party, has dramatically changed tack, cosying up to Kerry, whom he has called “a true friend of Israel”. Lieberman’s unlikely statesmanship has made Netanyahu’s run-ins with the US look, in the words of a local analyst, “childish and irresponsible”.

It is in the light of these mounting pressures on Netanyahu that one should understand his increasingly erratic behaviour – and the growing rift with the US.

A damaging falling-out last month, following insults from the defence minister against Kerry, has not subsided. Last week Netanyahu unleashed his closest cabinet allies to savage Kerry again, with one calling the US secretary of state’s pronouncements “offensive and intolerable”.

Susan Rice, Obama’s national security adviser, tweeted her displeasure with a shot across the bows. The Israeli government’s attacks were “totally unfounded and unacceptable”, she noted. Any doubt she was speaking for the president was later dispelled when Obama praised Kerry’s “extraordinary passion and principled diplomacy”.

But despite outward signs, Netanyahu is less alone than he looks – and far from ready to compromise.

He has the bulk of the Israeli public behind him, helped by media moguls like his friend Sheldon Adelson who are stoking the national mood of besiegement and victimhood.

But most importantly he has a large chunk of Israel’s security and economic establishment on side too.

The settlers and their ideological allies have deeply penetrated the higher ranks of both the army and the Shin Bet, Israel’s secret intelligence service. The Haaretz newspaper revealed this month the disturbing news that three of the four heads of the Shin Bet now subscribe to this extremist ideology.

Moreover, powerful elements within the security establishment are financially as well as ideologically invested in the occupation. In recent years the defence budget has rocketed to record levels as a whole layer of the senior military exploits the occupation to justify feathering its nest with grossly inflated salaries and pensions.

There are also vast business profits in the status quo, from hi-tech to resource-grabbing industries. Indications of what is at stake were illuminated recently with the announcement that the Palestinians will have to buy from Israel at great cost two key natural resources – gas and water – they should have in plentiful supply were it not for the occupation.

With these interest groups at his back, a defiant Netanyahu can probably face off the US diplomatic assault this time. But Kerry is not wrong to warn that in the long term yet another victory for Israeli intransigence will prove pyhrrhic.

These negotiations may not lead to an agreement, but they will mark a historic turning-point nonetheless. The delegitimisation of Israel is truly under way, and the party doing most of the damage is the Israeli leadership itself.

A version of this article first appeared in The National, Abu Dhabi.