The Obama administration is set to open a new chapter in Israeli-Palestinian diplomacy with a shift to quiet, below-the-radar negotiations and a new diplomatic juggling act for special envoy George Mitchell.

Despite some press reports, Washington is unlikely to ratchet up pressure on Israeli Prime Minister Benjamin Netanyahu or spell out detailed U.S. positions on critical issues like borders and the status of Jewish settlement blocks. Instead, according to analysts with access to top officials here and in Jerusalem, Mitchell will use a variant of shuttle diplomacy to create an umbrella for direct talks between the two sides.

“We are nearing the reconvening of Israeli-Palestinian peace talks,” said Yossi Alpher, a veteran Israeli analyst. “Mitchell is working behind the scenes on formulations, the Egyptians
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are very active, and Bibi is cooperating. Eventually [Palestinian President Mahmoud Abbas] will come around.”

But that will be just the start of a process likely to be as difficult and contentious as previous, more public rounds of talks.

“That’s where the fun will start,” Alpher said. “Can Bibi even begin to approximate [former Prime Minister Ehud] Olmert’s far-reaching offer? What will happen to Bibi’s coalition? Where will the Americans and Egyptians be? Will Hamas try to derail the process? How will an Israel-Hamas prisoner exchange affect matters?”

Despite those difficulties, there is a growing sense in Washington that the Obama administration — chastened by its early misstep on settlements and its premature promises of quick progress in restarting stalled negotiations, and with new concerns about terrorism dominating the agenda — is crafting a low-key, pragmatic plan that limits expectations, rejects dramatic public events and takes into account the political dilemmas faced by both Netanyahu and Palestinian President Mahmoud Abbas.

This week National security Adviser Jim Jones is heading back to the region for meetings with top Israeli and Palestinian officials. Secretary of State Hillary Clinton is reportedly intensifying talks with Egyptian and Jordanian officials about the expected new round of diplomacy.

In an hourlong interview with PBS’ “Charlie Rose,” Mitchell said the administration’s goal is a “comprehensive peace in the region” and that negotiations “should last not more than two years ... personally I think it can be done in a shorter period of time.”

Mitchell, when asked about what levers Washington could use to press the balky participants back to the table, said “Under American law, the United States can withhold support on loan guarantees to Israel. President George W. Bush did so.”

That was interpreted by some as a clear threat to use loan guarantees to wring more concessions about of Israel, by others as a careless hypothetical statement by the diplomat.

“The statement by Mitchell was insulting,” said Barry Rubin, director of the Global Research in International Affairs (GLORIA) Center in Israel. “They are all trying to pretend that the problem isn’t the PA’s intransigence, which of course dooms them to failure. As I have repeatedly stated: the administration has no way to get the PA to the negotiating table, especially since it won’t dream of pressuring it. The administration has only itself to blame for its failures.”

While some press reports suggest the flurry of activity in recent days points to a dramatic new peace move, many analysts say the administration has something different in mind.

David Makovsky, senior fellow at the Washington Institute for Near East Policy and co-author of “Myths, Illusions, and Peace: Finding a New Direction for America in the Middle East,” said the administration is on the verge of a significant policy shift, with an emphasis on addressing the top concerns of both sides while eschewing high-profile meetings and sweeping expectations.

“The good news is that neither side is looking for an ‘Annapolis Two’-type peace conference, or anything glitzy with a lot of journalists,” he said. “The feeling is that anything too-high profile creates coalition crises and expectations that can’t be met.”

Palestinian leaders, who traditionally do not want to negotiate without a tangible U.S. presence, “want ‘proximity talks,’ ” Makovsky said. “They want Mitchell shuttling from side to side, building momentum.”
Israel, on the other hand, prefers direct talks to third-party mediation, Makovsky said.

Those preferences will set the parameters for the new Mitchell mission, he said: “They will use the rubric of Mitchell proximity talks to try to put together quiet, low-profile, direct talks. That’s the sweet spot they seem to be aiming for.”

Initially, the talks are likely to focus on the single issue of territory and borders, he said, where the outlines of an eventual agreement are widely known and accepted; on issues such as Jerusalem and refugees, “the feeling is that none of the leaders have really prepared their publics.”

Palestinian President Abbas is ready to move past the settlements roadblock — erected in large measure by the Obama administration’s initial focus on a complete freeze, he said.

On Monday Makovsky returned from the region, where he met with top Israeli and Palestinian leaders. “What I found was a much more pragmatic, practical attitude,” he said.

“I’m not talking about breakthroughs; there are difficult procedural issues, many questions about what you negotiate about,” he said. “But the Israelis are willing to start with territory; they want to deal with the issues sequentially, and understand territory is the place to begin.”

Others aren’t so convinced.

Edward Walker, a former state department official and onetime U.S. ambassador in Tel Aviv, said that what’s shaping up may be more a diplomatic holding action than a serious ratcheting up of U.S. involvement.

The reason: leaders on both sides are not ready to embrace the political risks any real move back to serious negotiations would entail. And the administration, he said, knows that.

“There’s nothing new that would warrant a new U.S. peace push at this time,” Walker said. “The Palestinians are still conflicted and unable to operate together; the Israeli government is incapable of moving on the settlement issue, given its composition, without falling. And generally, there is decreasing interest around the world in the two-state solution.”

Walker said that under the new administration strategy, Mitchell will keep “pounding away, pushing, waiting to see if things open up a crack. And to try to push conditions so an opening might occur.”
But he sees that effort more as a way to keep a lid on Mideast tensions until the conditions that are causing the current stalemate change.

Walker also argued that claims the administration’s Mideast policy shop is getting its act in order may be premature.

“The story I’m getting out of the State Department is that there is enormous disorganization in the administration on this; they just don’t seem to have as coherent, unified policy. They’re still trying to sort out the basics.”