The U.S.-Israel relationship has entered into a tailspin for the first time since 1991, when Secretary of State James Baker refused loan guarantees to Yitzhak Shamir's Likud government. Now, like then, the issue is Jewish settlements in areas Israel conquered in 1967. When Israel embarrassed Vice President Joe Biden on March 9 by announcing the expansion of an existing East Jerusalem settlement, the reaction from Israel's friends in the press and in Washington was swift. New York Times columnist Thomas Friedman likened Benjamin Netanyahu's settler-coddling government to a drunken driver, Hillary Clinton scolded Bibi for 45 minutes over the phone, and pundits across the political spectrum spent an entire week debating just how grave the current "crisis" is.

More interesting, however, is how Israel's self-proclaimed defenders in Washington have reacted to it. Rather than maintaining a neutral stance or endorsing the pro-Israel, anti-settler line espoused by Thomas Friedman and Hillary Clinton, among others, AIPAC chose to denounce the Obama administration in a press release on the eve of its annual conference, urging Obama "to take immediate steps to defuse the tension with the Jewish State" and "make a conscious effort to move away from public demands and unilateral deadlines directed at Israel." There was no mention of Netanyahu's politically inflammatory expansion of settlements surrounding Jerusalem, his lack of control over the junior cabinet officials who announced the construction of 1,600 new housing units while Biden was visiting, or steps Israel could take to defuse the crisis.

AIPAC was not always like this.

In the late 1980s, the pro-Israel lobby faced a similar dilemma that jeopardized U.S. military aid to the Jewish state: Israel's refusal to stop selling arms to South Africa's racist apartheid regime. Then, unlike now, AIPAC did not blindly defend the government in Jerusalem and attack the U.S. administration. Rather, it pressured the Israeli government to back down from a myopic and destructive policy that damaged Israel's image and threatened its warm ties with Washington.

In August 1986, as popular anti-apartheid legislation was making the rounds in the U.S. Senate, a paragraph with far-reaching consequences for Israel crept into the bill. It called for the president to document any arms sales to South Africa and "add the option of terminating U.S. military assistance to countries violating the embargo." In Israel, the national-unity government of Shimon Peres and Yitzhak Shamir disregarded the bill, convinced that it would never pass.

In Washington, though, leading AIPAC officials believed that Israel's ties with Pretoria were tarnishing the country's image in Congress just as the push for anti-South African sanctions was gaining momentum on the Hill. And they began pressuring the Israeli government to act.

Some of AIPAC's biggest donors were outraged, given that arms sales to South Africa were a major economic windfall for Israel. But unlike the donors, AIPAC's Beltway insiders saw the bigger strategic picture. In their eyes, the ongoing and increasingly publicized military relationship with South Africa was alienating some of the Jewish state's staunchest supporters in Congress, who were also committed to the anti-apartheid cause. Pro-Israel lobbyists believed that attempts by anti-Israel groups to paint the Jewish state as an ally of the racist South African regime would eventually sway the American public unless Israel ceased selling arms to South Africa.

Despite AIPAC's pleas, the Israelis still refused to take the threat seriously. In the upper echelons of the Israeli government, there was a widely held belief that AIPAC and other Jewish organizations, as well as friendly members of Congress, would protect Israel. They were convinced that this threat, like other bumps in the road, would soon pass. AIPAC's lobbyists saw plainly that Israel was shooting itself in the foot, but it would take a few months before this dawned on leaders in Jerusalem.

When President Reagan vetoed the Comprehensive Anti-Apartheid Act on September 26, 1986, the Israelis felt vindicated. But Congress immediately overrode Reagan's veto with overwhelming majorities in the House and Senate. The Comprehensive Anti-Apartheid Act became law a week later--including the amendment threatening to cut off military aid to Israel. It was a rude awakening for Shamir, who left the foreign ministry to take over as Prime Minister on October 20. He was forced to apologize to the AIPAC lobbyists, telling them "Your president told me I didn't have to listen to you." But now, with the anti-apartheid law on the books, he did.

Embarrassed by his miscalculation, Prime Minister Shamir had no choice but to impose sanctions of his own. As two leading Israeli journalists argued in the Washington Post, "Without U.S. military aid, valued at $1.3 billion this year, Israel could soon be defenseless, destitute or both."  Shamir's government now saw the threat clearly and passed a sanctions resolution on March 18, 1987, vowing to sign no new defense contracts with South Africa. Two weeks later came the dreaded U.S. report on South Africa's arms suppliers. It named several European countries as occasional violators of the arms embargo, but the focus was on Israel's arms sales. Damningly, the report's authors concluded, "We believe that the Israeli government was fully aware of most or all of the trade."

Suddenly, American Jewish organizations were forced to acknowledge an unsavory relationship they had downplayed and denied for years and defend Israel's more pressing interest: ongoing military aid from Washington. Pro-Israel organizations such as AIPAC saw the prospect of losing U.S. aid as a much greater threat to the Jewish state than cutting ties with South Africa. As the self-appointed guardians of Israel's interests in Washington, they told Shamir to make sure Israel's measures against South Africa were just as strong as those taken in the United States and Western Europe--export revenues be damned.

Such resolve and foresight is sorely absent today, when AIPAC's reflex is to denounce the White House rather than quietly pressuring the Israeli government to abandon policies that damage its image in Washington and the rest of America. The pro-Israel lobby is not stupid; it has correctly judged that ongoing settlements in greater Jerusalem and the West Bank are not as politically toxic in today's Washington as arms sales to a white supremacist government were in the 1980s. But its ostensibly pro-Israel line is startlingly shortsighted. It allows Israel's government to get away with further settlement expansion that will eventually do grave harm to Israel's long-term survival by undermining the two-state solution.

As with arms sales to apartheid South Africa in the 1980s, most clear-eyed observers of the Middle East regard the settlement enterprise as a public diplomacy disaster for Israel--not to mention a long-term strategic liability.

If AIPAC is truly concerned about Israel's long-term security, it should be denouncing new settlements and demanding the dismantlement of existing ones with even greater fervor than the Obama administration. If it does not, AIPAC lobbyists may soon find themselves defending something far more distasteful than 1600 new homes in Ramat Shlomo. As Bibi's own defense minister Ehud Barak acknowledged last month, "as long as between the Jordan and the sea, there is only one political entity, named Israel, it will end up being either non-Jewish or non-democratic...If the Palestinians vote in elections, it is a bi-national state, and if they don't, it is an apartheid state."

And when that day comes, AIPAC will have to confront a South African problem far bigger than the one it faced in 1987.

Sasha Polakow-Suransky is a Senior Editor at Foreign Affairs and the author of the forthcoming book The Unspoken Alliance: Israel's Secret Relationship with Apartheid South Africa.