Jerusalem Mayor Nir Barkat poses with a road sign for the new U.S. Embassy in Jerusalem on Monday. (Jerusalem Municipality via AP)

Daniel B. Shapiro is distinguished visiting fellow at the Institute for National Security Studies in Tel Aviv. He served as U.S. ambassador to Israel and senior director for the Middle East and North Africa at the National Security Council in the Obama administration.

The Trump administration’s decision to move the U.S. Embassy in Israel to Jerusalem has stirred up a variety of responses in the region and elsewhere. Some say that it means the death of hopes for peace. Others assert that it marks Israel’s final victory over the Palestinians. And still others insist that it justifies further Palestinian intransigence.

In fact, none of these statements is true.

Advocates of a two-state solution see the embassy move as a blunder by the United States that signals the death knell of prospects for peace. But the sky is not falling. Moving the U.S. Embassy to a location in West Jerusalem is correct and reasonable. West Jerusalem has served as Israel’s capital since the founding of the state, and no plausible two-state map would change that. Our embassy’s presence in the city reinforces the legitimacy of historic Jewish ties to the city, which are too often denied by Palestinians.

Moreover, nothing about our embassy’s location there would prevent the emergence of a shared city with two capitals as part of a two-state solution. Perhaps inadvertently, President Trump’s decision has opened the door for much more frank discussion about an eventual Palestinian capital, and U.S. Embassy to Palestine, in East Jerusalem.

Long a taboo in both Israeli and American politics, the ice is beginning to break. White House officials reportedly informed Israeli Defense Minister Avigdor Lieberman last month that Trump’s emerging peace plan would call for Israel to transfer four Arab neighborhoods in East Jerusalem to the Palestinian Authority. That’s a start.

The precise boundaries could be determined only in negotiations, and Israel would need to remain connected with key holy sites. Those talks may not happen under the current Israeli and Palestinian leadership, but openly discussing this necessary aspect of a realistic, conflict-ending two-state solution – which remains the United States’ strategic objective — will prepare the ground for when there are leadership changes.

Meanwhile, triumphalists in Israel and the United States think that the embassy move means that Israel has “won” the conflict. (As Axios’s Barak Ravid has reported, Saudi Crown Prince Mohammed bin Salman is now demanding that the Palestinians accept any offer Trump puts on the table, suggesting he shares this view.) But these declarations of victory are premature. It is true that Israel is strategically stronger than ever, that its legitimacy is more widely recognized and that it enjoys gradual warming with a range of Arab states. These are all welcome developments. Yet however good that feels, the inexorable demographic dilemmas of how Israel can maintain both its Jewish and its democratic character while controlling all of the West Bank and its Palestinian population have not changed at all.

On this subject, the crown prince is a good example of the principle that “a little knowledge is a dangerous thing.” His statements — which betray his limited understanding of Israeli-Palestinian final status issues, the realities of Palestinian politics and the limits of Saudi influence — may delude some in Israel that the hard decisions can be avoided. But they can’t, and eventually, a future Israeli government will have to make some wrenching choices. Ongoing expansion of settlements outside of blocs that could be accommodated in land swaps only makes those choices harder.

Even the crown prince acknowledges that the Saudis cannot normalize relations with Israel without meaningful progress toward a two-state solution. If the conflict simply festers, Israel could squander the real opportunity for full integration into the region. So Israel’s own interests still require finding a path to end the conflict in two states, or at least to keep that prospect alive.

At the same time, some Palestinians insist they can increase Israel’s isolation by demanding one-person, one-vote and screaming “apartheid.” But this is not a winning strategy. Palestinians can hold out and refuse to tell hard truths to their own people about the legitimacy of a Jewish state, Israel’s permanence and the immorality of violence, but their ability to generate pressure on Israel is declining.

Continuing to refuse to negotiate — Palestinian leaders today even boycott talks with U.S. officials — will produce neither one state with full citizenship for West Bank Palestinians, nor relief for those in Gaza suffering under Hamas’s rule, nor crushing pressure on Israel. Rather, it will mean a slow, grinding perpetuation of the status quo-minus.

Palestinians need new leadership, particularly after Palestinian Authority President Mahmoud Abbas disgraced and disqualified himself with a series of vile anti-Semitic canards. Unless those who follow him address the Israeli public’s legitimate anxieties about Palestinian intentions, their people will continue to languish while much of the world shrugs its shoulders, turns away from a hopeless cause and makes high-tech deals with Israel.

The U.S. Embassy in Israel belongs in Jerusalem, and I will join those celebrating this overdue step. But the next day, surprisingly little about this conflict will have changed. The current leaders may be unable to act to pull out of their stalemate, but reality will find a way of forcing their successors to confront their illusions.