In the course of working on my master´s thesis in 1999, I had opportunity to interview Prime Minister Yitzhak Shamir at length regarding his decision not to retaliate against Iraq during the First Gulf War. (Shamir read almost every political column I published throughout the 1990s, and would often comment favorably and graciously. “Keep at it, keep at it, and keep at it!” he encouraged me).

Shamir´s reflections on the nexus between Iraq, Israeli settlement policy and relations with U.S. President George H. W. Bush are fascinating in the context of current Prime Minister Benjamin Netanyahu´s policy dilemmas regarding Iran, settlements, and relations with President Barack Obama.

Moshe Arens, who served as defense minister under Shamir, alleges in his memoirs that Shamir believed he was securing preferential treatment from the U.S. by acceding to Bush’s entreaties to stay out of the fighting in Iraq.

“It was strange to see Shamir, who had been so tough in the disputes which had arisen in past with the Americans, bending so far in order to meet the expectations of the Americans in the current situation. It appeared that he had set for himself certain issues on which he had decided not to give even an inch, and to compensate for this he was prepared to show compromise on other issues. Settlements in Judea, Samaria and Gaza were, of course, in the first category, whereas avoiding angering the Americans regarding involvement in the Gulf war could serve as compensation for this," he wrote.

Arens later told me that “Shamir was making a choice: settlements or responding to Iraqi attacks, and he chose settlements.”

From Shamir´s own memoirs, it is clear that the main reason he rejected an Israeli retaliatory strike on Iraq, despite a cabinet majority in favor of one, was the risk of political conflict with the U.S., and the assessment that Israel would be better placed to "make a stand on other issues" after the war if it bowed to American pressures. But what exactly was it that Shamir thought he was going “to make a stand for” after the war? Did Shamir have any basis for believing that he would have a freer hand on issues like settlements if he gave in to Bush during the war?

Apparently Shamir did think so. In a conversation with me, Shamir said that “We didn’t have any deal between us, Bush and I. But he understood just what wasn’t acceptable from my point of view. … In our December 1990 meeting when we discussed the retaliation question, Bush and I had a tough exchange about settlements. Bush objected to settlement expansion in the ´occupied territories.´ I said to Bush: ´Mr. President, this land is ours, what are you talking about! This is essential to us. Your objections won’t help.´ No Israeli prime minister had ever spoken like that before. Ask Zalman Shoval. Zalman was there and he was flabbergasted at my brazenness and said to me: ´How can you talk like that to the president of the United States!?´ So, I think that Bush knew exactly what we could bend on and what we would stand up for insistently.”

(As an aside, I ask: Where-oh-where can we get leaders today with such grit and ideological determination?)

This very revealing description of the critical December meeting in Washington suggests that at least in Shamir’s eyes, there was a quid pro quo in play between Washington and Jerusalem. Shamir thought that he was clearly signaling his priorities to Bush, leader-to-leader. I’ll give you restraint on Iraq and you lay off on settlements — as it were.

When I expressed credulity about this, Shamir responded: "I didn´t really believe Bush on the settlement issue. I knew that the issue wouldn’t go away. But I felt that we were losing nothing by going along with the U.S. on the restraint issue. And I made a calculation: I felt that we really could better stand up for ourselves on the diplomatic and settlement issues in this way. You have to choose your battles. Indeed, we prevailed diplomatically after the war. Settlements continued. Madrid was a success from our point of view. Never had they given in to us as much as they did.”

For the sake of historical accuracy, it is important to note that at least three officials who were in key positions at the time disagree with the above reconstruction of Shamir´s thinking. Eytan Bentsur, then-director general of the Foreign Ministry, told me that "it is ridiculous to believe that Shamir thought he could purchase silence from Bush on settlements. Shamir decided not to respond to the Scud attacks because the IDF´s plans to hit Iraq were overly adventurous and would have led to unnecessary loss of life."

Yossi Ben-Aharon, then-director general of the Prime Minister´s Office, told me: “I never got the feeling from Shamir that he thought, during the Gulf War, that he needed to buy credit in Washington, or that there was a need to pave the road with goodwill toward a re-start of the peace process. Yes, we smelled ‘linkage’ in [James] Baker’s regional talks with the Arabs, promising them a peace process after finishing off Saddam. But to say that Shamir refrained from responding to the Scuds because of settlements — well, that is just not in the workings of his mind. Shamir made the decision not to retaliate at the famous cabinet meeting on Shabbat, January 19. After hearing the reports of the army, air force and defense minister, Shamir analyzed all the reasons why we could not act: It was too dangerous with too much potential loss of life, for too small a return, with too much risk of conflict with the U.S. So thorough was Shamir´s summary that Israel Air Force Commander Avihu Bin-Nun called the next day to get a transcript so that he could read it to IAF senior commanders.”

Similarly, then-cabinet secretary Elyakim Rubinstein told me that “Israel did not have a good military option, and we were also very concerned about the ramifications of retaliation on Jordan.”

What can this teach us with regard to Netanyahu´s current policy dilemmas?

Well, after the Gulf War, the conflict between Washington and Jerusalem over settlements only intensified and became embroiled in the dispute over loan guarantees. Shamir´s government was denied these guarantees because of continuing Israeli settlement activity — despite whatever "understanding" Shamir may have thought he had with Bush. Many observers believe that this dispute played a role in the defeat of the Shamir government in the 1992 Israeli elections.

Thus we can ask about our current government: Does Netanyahu believe that he has "bought" American cooperation in stopping Iran´s nuclear drive by (effectively) freezing settlement construction over the past two years? Does he think that by refraining from unilaterally attacking Iran this summer, Israel is securing for itself a degree of immunity from American pressures on the Palestinian issue in 2013?

The Shamir experience would suggest that calculations of accrued credit and presumed trade-offs make for faulty and dangerous policymaking. Rather, Netanyahu should be guided by strategic and operational considerations regarding each issue on its own merits, and seek explicit understandings with Washington regarding Iran and regarding the Palestinians, without implicit or imagined linkage.