In his last days as US president, George W. Bush seemed almost oblivious to most of the key problems in the Middle East. As a result, during the 75-day interval between the end of his administration and the commencement of Barack Obama's presidency, key regional powers took up the slack and sought to fill the void. Attempts were made through multilateral mediation to reduce the tension that had resulted from the Israeli offensive on Gaza.

As soon as he took office, Obama made extensive efforts to regain some of his nation's lost prestige and respect in a region of vital importance for the US. First and foremost, the new US president took a deep interest in reviving the Middle East peace process.

Unsurprisingly, the new administration hastened to assist its regional allies, which had been weakened by the Bush administration's policies, by laying the groundwork for the resumption of peace talks. Other regional powers opted to give Obama the latitude to translate his intentions into actions. Regional mediation efforts were hence put on the back burner, paving the way for US diplomatic efforts, which were diligently led by special envoy George Mitchell and his team.

In stark contrast to these positive developments, Israeli Prime Minister Benjamin Netanyahu sought - and succeeded, to a large extent - to slow the momentum that the US-led peace effort was building. Netanyahu's obstructive, hard-line positions include not just his refusal to freeze colony activities in the Occupied Territories, but also his expectation for an almost complete surrender by the Arabs. He demands that Arabs should not only recognise the "Jewish nature" of the state of Israel, but also accept the "right of Jews to live and settle anywhere in the West Bank".

US diplomatic efforts, including the latest regional tours by Mitchell, his assistant Fredric Hoff, Secretary of Defence Robert Gates and National Security Advisor James Jones, should have helped Obama establish solid regional support for his attempts to move the peace process forward. These efforts could also have helped to defuse the crisis over Iran's nuclear programme. But all of that was not to be, however, because of Israel's intransigence.

Israel seems to be sticking to its guns, favouring the status quo and its much-loved crisis management approach. Israelis argue that they should not be made to pay for repairing eight years of failed US policies. US pressure has hence been resisted by the Netanyahu government, in the hope that Israel will somehow be left to pursue its objectives unilaterally - and through military means if necessary.

This logic involves dangerous illusions; key among them are Israel's preference to maintain the status quo and the belief that it should be allowed to end the Arab-Israeli conflict on its own terms. Attempts to rally Arabs behind a concerted US-Israeli effort to punish Iran while assuring the survival of the 'friendly' Arab regimes is also an unrealistic objective. The belief that Israel would be better off if the region is riven by a religious war is also questionable.

Faced by myriad challenges and distracted by other international crises, the world powers appear helpless to advance the peace process. The Middle East is being held hostage by Israeli intransigence. Yet, at the same time, Israel's position appears precarious. This situation is strikingly similar to the one that prevailed in Europe before the First World War, when politicians failed to foresee the risks of maintaining the status quo. At that time, the pathetic reaction of the international community to the situation in the Balkans ultimately resulted in one of the most horrible massacres in human history.

While outsiders appear to be adopting a wait-and-see approach, frustration is mounting throughout the Middle East. This aggravation may soon reach a climax, the repercussions of which could be felt across the world. If this situation is not tackled quickly and wisely, violence appears inevitable. And unlike in previous cycles of Middle Eastern hostilities, this violence may not be contained within the region. This raises the possibility of a repeat of the scenario that played out in Sarajevo in 1914.