THE outlook for peace between Jews and Arabs in the Holy Land has rarely looked bleaker, at least if you take the pronouncements of the protagonists at face value. This week the Israelis got a new government whose prime minister, Binyamin Netanyahu (left), refuses to say that the Palestinians should have a state of their own. The Islamists of Hamas, who won the last election in the Palestinian territories and may win the next, officially deny that Israel should exist at all.

Israel’s assault in January on the Hamas-run Gaza Strip has failed to blot Hamas out of the equation. Mr Netanyahu has said he wants Israeli forces to “finish the job” and oust it from power in Gaza. His coalition includes an extreme chauvinist party whose leader, Avigdor Lieberman, wants to strip rights from Arab Israelis “disloyal” to the Jewish state. As Israel’s new foreign minister, Mr Lieberman, who this week disavowed even the sketchy peace accord signed at Annapolis in 2007, may have to negotiate with the Palestinians and the Arab world. On the face of it, this configuration of people and power on both sides of the fence spells doom.

Yet the politics of the ill-named peace process are invariably fluid. For one thing, Mr Netanyahu is notoriously opportunistic, a quality that can sometimes be turned to a common good. He talks, albeit vaguely, of his desire to make peace with his neighbours, presumably including Palestinians. He is also said to have undertaken, as the price for drawing the less hawkish Labour party into his coalition, that he would abide by previous agreements made by Israel with the Palestinians, most of which acknowledge that the Palestinians should have their own state. Previous Israeli leaders, including Mr Netanyahu’s predecessors, Ehud Olmert and Ariel Sharon, both once set their faces against Palestinian statehood but were persuaded that it was the only way to make Israel safe. It is possible that Mr Netanyahu will in due course come to see similar sense. For it will rapidly become plain that his alternative ideas—giving Palestinians “economic independence”, for instance, without an actual state—are rubbish. The presence of the toxic Mr Lieberman in the foreign ministry is not itself an insuperable barrier to negotiation. The Arabs and Palestinians must hold their noses and pray that other mediators, perhaps Mr Netanyahu himself, will offer a passage towards sincere negotiation.

Fluidity on the Palestinian side is more palpable. Its two bitterly opposed wings are groping towards a unity government. In a mirror image of Mr Netanyahu’s predicament, Hamas may be dragged towards accepting previous Palestinian agreements with Israel that include recognition of the Jewish state without having clearly to spit out the dreaded words of acknowledgment itself. Several Hamas leaders have also stated that if Palestinians agree in a referendum to accept Israel’s existence, so be it. If a Palestinian unity government including Hamas were to be formed that disavowed violence, it would be foolish if Mr Netanyahu refused to talk to it.

But outsiders must still help

In 2002 the Arab League, as chief advocate of Palestinian rights, promised to recognise Israel in return for a Palestinian state along the borders of 1967, with an implicit acceptance of land swaps to let some Jewish settlements on the West Bank stay in Israel. That promise, reiterated by the Arab League this week, still stands. But greater American involvement and flexibility, both lacking for too long under George Bush, are crucial.

Until now, Barack Obama has been oddly shy of embroilment, partly because of the lack of a solid Israeli government. That excuse no longer holds. He and his secretary of state, Hillary Clinton, have declared that securing two states, of Israel and Palestine, must be the sole basis of a deal. America cannot give unstinting support to an Israeli government that says it is resiling from the fundamental principle of two states and will continue to colonise the West Bank. If Mr Netanyahu does not change course, Mr Obama should reduce aid to Israel. He must also strive, through the offices of his envoy, George Mitchell, or through other mediators, to bring Hamas into negotiations. That way, grim as the outlook is, it need not be hopeless.