Great news! A deal between adversaries in the Middle East has been apparently reached. Bad news: It's between Joe Biden and the Israeli unity government. 

For the last couple of days, Biden has tried to convince the Israelis not to attack Iran after the mullahs sent hundreds of missiles and drones to attack Israel directly for the first time. Today, NBC News reports that the war cabinet may take Biden's advice, choosing instead to focus on Iranian proxies and IRGC outposts in Syria. At least, that's what the Israelis are now telling US officials, although their info may be a little out of date:

U.S. officials expect a possible Israeli response to Iran’s attack over the weekend to be limited in scope and most likely involve strikes against Iranian military forces and Iranian-backed proxies outside Iran, four U.S. officials told NBC News.     

The U.S. assessment is based on conversations between U.S. and Israeli officials that happened before Iran fired more than 300 drones and missiles at Israel on Saturday night. ...

The U.S. officials stressed that they have not been briefed on Israel’s final decision about how it will respond and that the options could have changed since the weekend attack. They also said that it is not clear when an Israeli response will happen but that it could happen at any time.

If that seems a little shaky, Israel's Channel 12 reports that the Israelis do want to calculate their response to the needs of their allies. The Times of Israel notes that the report indicates Jordan in particular is concerned Iran state media fingered it as their next target:

Meanwhile, Israel has reassured Arab countries in the region that its response to Iran’s attack would not place them in danger, the Kan public broadcaster reported, amid concerns from several countries that they would be held accountable by Tehran in the event of an Israeli retaliatory strike.

According to the report, Israel has informed allied countries such as Jordan, Egypt and the Gulf states that its response, when it comes, will be carried out in such a way that Iran cannot implicate them in the retaliation.

In particular, Tehran’s comments have sparked concern in Jordan after Iran’s official media warned that Jordan would be the next target in the event it cooperated with Israel in a showdown with Iran.

This may just be wisdom rather than bowing to the pressure of allies. Iran is the head of the snake, but Israel has already gone all-in against Hamas in Gaza and can't simply open up a new major theater of operations. They need to finish the job in Rafah and cut off those Iranian tentacles on their border in the south, then deal with Hezbollah and Syria to the north. But Rafah is the key now, and the faster the Israelis finish that operation, the better prepared they will be to deal with Iran later.

That doesn't mean that Israel doesn't have leverage of its own. After several days of dithering from the Biden administration over its own response to Iran, the US suddenly has a new slate of sanctions it wants from International Monetary Fund (IMF). Even as late as yesterday, the Biden administration couldn't answer what its response to Iran's attack would be, but Janet Yellen will roll them out now that Israel seems to be signaling a more deliberative approach to Iran:

Treasury Secretary Janet Yellen is preparing fresh sanctions for Iran, vowing that the U.S. "will not hesitate" to inflict economic punishment in response to the Islamic Republic's unprecedented attack on Israel.

Why it matters: President Biden is urging Israeli Prime Minister Benjamin Netanyahu to exercise military restraint. But in the economic sphere, the administration is demonstrating a willingness to retaliate against Iran.

• It's a subtle message to Israel that there is more than one way to harm the ruling regime in Tehran. ...
• The G7 is also considering sanctions with the goal of isolating Iran internationally and increasing economic pressure on the regime, White House national security spokesman John Kirby told reporters Monday.

Subtle? Hardly. Israel's well acquainted with the efficacy of American sanctions, because they worked during Donald Trump's "maximum pressure" policy. Joe Biden has spent the last three years funding and appeasing Iran, a policy whose consequences are disastrously unfolding in ways that are also not at all subtle.

So yes, it's good to see some movement away from appeasement, but the Iranians spent the last two weeks threatening retaliation against Israel before actually launching their massive missile/drone attacks. Why didn't the US signal new sanctions at that time? The time for deterrence was before the attack, not after it. Apparently, Biden didn't want to make China unhappy by sanctioning Iranian oil again, the only really effective economic sanction against the mullahs, plus he doesn't want to deal with higher gas prices in an election year, according to Business Today:

Iran's recent missile and drone strike on Israel is predicted not to trigger significant sanctions action on Iran's oil exports from the Biden administration.

Analysts say this forecast is based on concerns about potential oil price hikes and the risk of upsetting China, a major purchaser of Iranian oil.

Following Tehran's weekend attack, which, as per the reports, was in retaliation for an Israeli strike on the Iranian consulate in Damascus on April 1, House Republican leaders criticised President Joe Biden for what they perceive as a lack of enforcement of existing measures. 

They announced plans to introduce a series of bills this week to tighten sanctions on Iran.

The dilemma that now knocks on the administration's door is how to address such attacks without escalating tensions, increasing oil prices, or alienating China, a crucial player in the Iranian oil market. 

So Yellen's mission is in part to get ahead of Republicans in Congress, who want to return to the much-more-successful "maximum pressure" policy on Iran during the Trump administration. But now Yellen and Biden also have to come up with sanctions that will really hurt Iran or risk having Israel go rogue and apply pressure a lot more directly -- like, say, destroying Iranian oil infrastructure and bypassing sanctions altogether. The Israelis have likely spent the last couple of days spelling that out to their US counterparts. They will look at the sanctions very closely, and if they don't do anything to seriously restrict Iran's finances, then all bets are off.

It's a time for choosing for Biden and his team. Do they act to contain the real threat to global peace in Tehran, or do they continue their appeasement of the mullahs while Iran continues to wage war directly and through its proxies? Because if they choose the latter, then Israel will likely decide that Biden's no longer much of an ally and that they will have to take Iran on directly.