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The upheaval in Iran offers the Obama administration a host of fresh foreign policy opportunities. Not the least of them is a chance to creep away from the corner into which it has painted itself in the Arab-Israeli peace process.

President Obama began with a broad strategy of simultaneously pressing Israel, the Palestinians and Arab states to take concrete steps toward peace. By the time Iranians took to the streets, it had allowed that broad front to be narrowed to a single point: a standoff with the Israeli government of Binyamin Netanyahu over whether "natural growth" would be allowed in Jewish settlements outside Israel's 1967 borders.

Pressuring Israel made sense, at...