The renewed violence between Israel and Hamas, in which 1.5 million innocent Palestinians are caught, is yet another definitive demonstration that there is no military solution to the Israeli-Palestinian conflict. Israel will not be able to secure its future, normalize its relations with the region and live in peace without an agreement with the Palestinians; Palestinians will not achieve liberation and independence without an agreement with Israel.

The fundamental conundrum is that the Palestinians and Israel cannot completely bridge the gaps that separate them on their own. To achieve an agreement, both parties require an outside intervention, and that can only come from the United States.

Beyond the violence, there is a critical problem that renders the status quo unmanageable: this is the expansion of the settlements, which erodes the physical possibility of a two-state solution. Settlement expansion threatens the meaningfulness of future negotiations about the establishment of a Palestinian state and poisons the political atmosphere. It creates political problems in Israel by empowering a passionate and belligerent constituency opposed to necessary territorial compromises. The responsible leadership in the Palestinian Authority, and the whole Arab world, is largely defenseless against the accusation that they have failed to deliver as long as settlements grow.

Along with securing a lasting cease-fire in Gaza, freezing the settlements will be the main issue the incoming administration must deal with in its early days. There is an urgent need to buy time to prepare the political groundwork for a successful round of negotiations, bolster moderates on both sides, establish an effective framework, and perform the other necessary tasks that would have to precede an agreement, without continuing to lose ground and credibility.

The reality is that no Israeli political leadership has been able to take the bold step of enacting a comprehensive settlement freeze, even during the Oslo period, nor is one likely to be able to do so on its own and survive. Israeli leaders need help, even though doing this is in their country's own interest. Only the American president can give the vital and necessary political cover to an Israeli prime minister and cabinet for this step to be adopted. This cannot take the form of pressure but should instead reflect strategic understandings and interests.

Along with the United States, the Arab states have an important role to play in this equation. While expanding the dialogue and even negotiations at the appropriate level with all parties, we need to work on a strategic partnership with responsible Arab leaders committed to ending the conflict. Israel's freeze of settlement activity needs to be coupled with significant incentives provided by the Arab world. These could take the form of public movement towards operationalizing the Arab Peace Initiative that could serve as a reasonable quid pro quo for Israel's settlement freeze.

Many political issues in the Middle East are interconnected and interdependent. A comprehensive regional strategy is needed in which the Palestinian-Israeli conflict is prioritized. Even though dealing seriously with this issue with view to resolving it will not solve all the other problems, it would be uniquely helpful across the board. Acknowledging that no other achievable goal in the Middle East would have as many benefits to the United States, we must abandon any thoughts about managing this conflict and proceed with a serious strategy to resolve it.

Palestine is the ultimate political symbol in the Arab and Muslim world. Whoever is perceived as the authentic champion of that cause gains enormous, possibly unassailable, credibility. Permanently losing the issue to radical religious extremists would very likely pave the way to an unstoppable wave of revolts and even revolutions. The forces aligned with Iran could not wish for a more powerful weapon in their campaign to destabilize Arab regimes and the Arab state system, to promote domestic radicalism and regional rejectionalism.

The United States, Israel and the Arabs have much to fear from such a scenario, and all need to move quickly to defuse this ticking bomb. The strategic partnership must move public perceptions from a zero-sum game to a win-win scenario through a conflict-ending agreement.

Equally, and urgently, closer attention needs to be paid to damage inflicted on moderate and realistic policies, and their advocates, by a toxic public discourse being peddled in the Arabic-language media that puts pragmatism and realism itself on the defensive.

It should be clearly understood that the radical religious forces' main appeal is to the sense of injured dignity that the Palestinian, Arab and Muslim peoples feel intensely. Military defeats, daily humiliation, and gruesome images and accounts of suffering under the occupation, enhance rather than weaken their appeal.

The lack of a palpable improvement on the ground in the daily lives of the people of the West Bank and East Jerusalem, with continued humiliation and hardship, continues to be a serious failing of the present policy: It weakens the moderate leadership, strengthens radicals and breeds a toxic public political discourse.

Improvement of the quality-of-life for the Palestinians requires the further development of the Palestinian security system based on a nation-building doctrine rather than one perceived as serving to enforce the Israeli occupation; improving access and mobility; economic improvements and institutional development, including good governance - all of which will take time.

The Bush administration launched initiatives on some of these fronts since Annapolis that have begun to bear fruit and need to be expanded.

All the criticism notwithstanding, Annapolis has yielded several positive trends that must continue:

1) It reaffirmed the indispensible world commitment to a two-state solution.

2)It launched several channels of formal and serious negotiations between the Palestinians and Israelis dealing with all outstanding issues.

3) It was followed by the indispensible, and the unquestionably successful, rebuilding of the Palestinian security system.

4) It placed a premium on Palestinian economic development but was short on delivering sustainable vehicles for development.

5) It identified good governance as a major objective. The global instruments designated to achieve this goal have fallen far short and need to be reassessed.

The twin policy of isolating Hamas and empowering moderates as implemented, has meant very little to the Palestinian people.

While the quality of life plummeted in Gaza under Hamas, the anticipated improvement in the quality of life for the Palestinians of the West Bank and Arab Jerusalem has simply failed to materialize. Failure to rectify that now would be political malpractice.

The two-state solution, as Winston Churchill once said about democracy, is the worst solution except for all the others. And, to make matters worse, it has an expiry date.

The Palestinians and Israelis have their futures, and even their survival - perhaps not just as states but as peoples - at stake. Decision makers who procrastinate may come to discover that their inaction has yielded the future to the advocates of paranoid delusions and primordial fears.

Just as the economic global crisis is offering an opportunity to rebuild the global economic system, the current crisis in the Middle East offers the opportunity to resolve the Palestine Israel conflict and to transform the political landscape, not just in the Middle East, but across the world.