If the Middle East peace process were a stock, it would be one of the riskiest investments on the market. But there are bullish indicators for renewed peace talks between the Israelis and Palestinians.

Both sides seem to be moving toward compromises which, although seemingly minor, might pave the way to the first serious peace talks since the failed Annapolis process that began in late 2007.

Palestinian Authority President Mahmoud Abbas said in an interview aired late Monday on Israeli television that he was ready to begin "proximity talks" – US-mediated negotiations for restarting peace talks – with Israeli Prime Minister Benjamin Netanyahu. Mr. Abbas also said that he would bring the plans for such talks – the specifics of which were presented over the weekend by US Middle East peace envoy George Mitchell – to the Arab League when it meets this weekend.

Raising expectations that a compromise may be in the works, it appears that Mr. Netanyahu has called some kind of de facto freeze on new Israeli building in East Jerusalem – which Palestinians see as their future capital.

"It's not that all construction has been frozen, because projects that have been approved in the past have continued to be constructed," says city councilman Meir Margalit, a member of Meretz, a left-wing party that favors an East Jerusalem settlement freeze. But within the municipality of Jerusalem, he says, committees that usually deal with approving building projects in East Jerusalem have not met since the March visit of Vice President Joe Biden was interrupted by the announcement of 1,600 new housing units in a Jewish East Jerusalem neighborhood.

"From my point of view, this is proof that when the Americans want something, 'yes, they can,' " he says, alluding to President Obama's campaign slogan. "It's a positive sign. The timing is very important, because as I see it, to freeze all new building in East Jerusalem is a symbolic step to restart the negotiations. It's a lot more important than building a few more apartments."
PM's office puts hold on new projects

During Mr. Biden's visit, Netanyahu's interior minister announced that 1,600 new housing units would be built in Ramat Shlomo, a Jewish neighborhood built in 1995, next to the crowded Arab neighborhood of Shuafat. In an Israeli TV interview April 22, Netanyahu said that there would be no building freeze in Jerusalem, and that his policy had not changed.

But Mr. Margalit says that since Biden's visit, the prime minister's office asked the Ministry of Interior, which must approve all such projects, "not to push forward any projects related to building in East Jerusalem." Some 11,000 new housing units which have already been authorized for construction in East Jerusalem will not be affected, he says, and this includes Ramat Shlomo.

Palestinians skeptical that Abbas's risks will pay off

Mr. Mitchell left the region on Sunday after intensive meetings with Netanyahu and Abbas. The veteran peace negotiator and former Senate majority leader plans to return next week with hopes of clinching an agreement on proximity talks. US officials in Tel Aviv indicated that such talks would begin by mid-May, and that Abbas would meet with Obama in Washington before then.

Many Palestinians, meanwhile, are skeptical as to whether the risks that Abbas is taking in order to enter peace talks will pay off.

"Taking risks to bring about a solution with Israel is a school of thought, politically speaking, that Abbas has been in for decades," says Zakaria al Qaq, the vice president of Al-Quds University and an expert on national security issues. But Dr. Qaq doubts that, given the circumstances in both Israeli and Palestinian society, the talks will progress to a meaningful outcome anytime soon.

"Abbas is a man of few alternatives right now, so of course it makes sense to begin talks," he says. However, the fact that there has been so much ado about "proximity talks" designed to set the stage for actual talks, Qaq says, leaves him and many Palestinians less than optimistic. It's an investment that few people are buying.

"Conflicting sides are supposed to start with proximity talks and move to direct talks," he says. "But here, we started with direct talks 18 years ago, and now we're moving to proximity talks? It's against the ABCs of negotiation."