There are many reasons to feel more pessimistic than optimistic about the possibility of any major breakthrough in the Israeli-Palestinian conflict this year. The inaction by the international community, especially the United States, over the past few years has made the situation more complicated, with increased violence and hardened public opinions on both sides.

In the aftermath of the Gaza war, Hamas' popularity has increased, both inside Palestine and in the wider Arab and Muslim world, with growing support among Palestinians for military resistance. Israel has shifted politically to the right, with broader acceptance of the "fifth column" theory, which views Palestinian citizens of Israel as a security threat.

Any talk of a peace process has negative connotations for both sides. For many Israelis, it raises fears that land returned to the Palestinians in the West Bank will eventually be used for launching rockets, as happened in Gaza. Similarly, for many Palestinians, the continuation of the peace process means endless talking without results as Israel continues to annex more Palestinian land for building or expanding settlements.

Internal political considerations add more problems to the mix. Hamas' political platform differs greatly from the Palestinian Liberation Organization's (PLO's) and Palestinian Authority's embrace of a two-state solution with an Israeli withdrawal to the 1967 borders. Instead, Hamas has suggested a long-term truce with Israel with no formal recognition. In Israel, the platform of the Likud party and Prime Minister-elect Benjamin Netanyahu, unlike those of the Kadima and Labor parties, does not accept the concept of "land for peace" and the establishment of an independent, viable Palestine. Instead Netanyahu is promoting a vague economic peace plan. Thus, any coalition or unity government, on either side, is likely to be unstable because of serious political differences between the parties involved. This decreases the probability that either side will be able to act on the terms of previously suggested end of conflict agreements.

There are no historical or charismatic leaders on either side to make such an agreement happen, and moderate leaders don't have enough power to build the consensus needed to make the necessary concessions. "Radicals" on both sides can continue to wreck any potential agreement and to feed each other's raison d'tre. Many observers believe that time is running out for the two-state solution without any acceptable or practical alternative.

It has become apparent that Palestinians and Israelis cannot make any substantive progress on the core issues without persistent mediation by third parties, especially the US, Europe and key regional players. As witnessed in the recent past, during the absence of a functional mediator, different approaches were tried by both sides and failed, with catastrophic outcomes. They led to unilateralism, a resort to brute military force, a security doctrine based on the power of deterrence that gave rise to collective punishment, suicide bombings and the increased launching of rockets. Temporary arrangements are no longer enough. These have only been used to divert attention away from addressing the core issues, maintaining the status quo, and managing rather than resolving conflict.

Despite the current realities on the ground that have led to this pessimism, there is a small but fragile window of opportunity. The declared intention of the Obama administration to change American policies in the region, putting the Israeli-Palestinian conflict at the top of its agenda, has indicated that a more determined mediation role will be pursued. Recruiting George Mitchell, who is known for his conflict resolution skills, might indicate more neutral American mediation.

There are existing tools that Mitchell can utilize and build upon. The gap in popularity between Hamas and Fatah is narrow and fluctuates with events on the ground. The Palestinian Authority can still be a relevant peace partner with a functional technocratic government, regional and international support, and a reformed security establishment. The Arab Peace Initiative is still on the table and could be employed to compensate for the current weakness of the Palestinian political system, and could open the door for a regional security arrangement.

Sources on both sides have suggested that the outgoing Israeli prime minister, Ehud Olmert, and the Palestinian president, Mahmoud Abbas, made some breakthroughs in negotiations following Annapolis and that former US President Bill Clinton's parameters are still valid. The public mood on both sides can be changed and new elections can bring new political realities. Lately, Hamas has shown signs of pragmatism, and Egypt, Saudi Arabia and Turkey can still influence Hamas' decisions. Many believe that a right-wing Israeli government will be less resistance to American pressure.

It seems that the Obama administration also believes that issues in the region are interrelated and is adopting a comprehensive approach. It should not be forgotten that Syria and Israel reached a point of direct negotiation before the Gaza war and that, in the past, Netanyahu was close to reaching an agreement with Syria. It is also likely that the Lebanese-Israeli front will stay calm in the short term. Both situations have implications for progress on the Palestinian-Israeli front.

Obama's emphasis on international cooperation, respect for international law and humanitarian law, dialogue and diplomacy, consultation with America's friends, and on listening to the voice of progressives in the American Jewish community, might create an environment for sustainable results. For any progress to take place, nothing is more important than for people on both sides to feel security, dignity and hope.

The cost of missing this opportunity would be tragic for stability in the region, US interests, Israel's security, Palestinian national aspirations, ending state and non-state terrorism, and Obama's pragmatic approach.