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>OK, not directly telling the Palestinians that they must do what he says, but saying that they'll only get American support if & when they do as he says. They know that without American support, they will not be able to oppose Israel. So while not exactly dictating to them what to do, the perception amongst the Palestinians is exactly that.
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PMFJI, but so what. If a country expects the support of another country, it's not unreasonable to assume that there will be "conditions" to that support. In this case, the condition is that they get rid of someone who is, in the US's eyes, a core part of the problem. If the people of that country aren't willing to fix that problem, why on earth should we continue to support them? Why help those who won't help themselves, so to speak? I'm not saying the US is always correct, but that's the nature of the world. If you want something, expect to have to give something in return.