Haim Saban has a dream: Help the Israelis and Palestinians adopt a pragmatic vision that will advance the goal of peace between the two nations.

Saban has for the past seven years been convening the Saban Forum – a fascinating gathering of influential government officials, academics and journalists from Israel and the US. Last week, at the Forum’s latest meeting in Washington, he added a surprising innovation: The Palestinian Authority Prime Minister, Salam Fayyad, and Israeli opposition leader Tzipi Livni, conducted an open and candid dialogue, moderated by a prominent local television personality.

I was present to hear the discussion between the two. So too were other forum invitees including Knesset members, senior administration officials, and other skilled peace envoys like Tony Blair, George Mitchell, Terje Rød-Larsen and Javier Solana. I am sure all the listeners felt, as did I, a strong feeling of optimism. This is how we would like to see the Israeli-Palestinian dialogue conducted: rationally, in a friendly atmosphere, free of past traumas, and focused on the benefits any agreement will have for millions of people.

Livni and Fayyad were cautious not to enter the minefield of the sensitive core issues. The exhaustive grappling with these deep disagreements cannot be handled in a public forum. But even in the absence of this practical dimension – on which, of course, the chances of a historical agreement will stand or fall – the spirit of the dialogue that the two leaders conducted was characterized by great hope and good will.

THE PROFOUND problem is that real life does not take place in the non-binding format of the Saban Forum. In reality, the wheels of the Israeli-Palestinian diplomatic process, which is nearing the end of its second decade, are deeply stuck. Any ill-considered move by any of the three leaders at the wheel – the Americans, Israelis and Palestinians – will only sink the diplomatic vehicle deeper in the mud. The only way to extricate it is with a powerful tow-truck.

US Secretary of State Hillary Clinton, who gave the opening address at the Saban Forum, made it explicitly clear in her speech that “if needed,” she would offer bridging proposals – the towing cable – aimed to prevent new deadlock when the talks restart – to drag the peace talks vehicle back to the main road.

Despite the determined rhetoric of the secretary of state, the majority of the forum’s participants were skeptical about the prospects of the negotiations, even if they are resumed in the near future in some form or another. In their opinion, there is only one common denominator between the Israelis, Palestinians and the Americans today: A lack of will to pay the price of a brave peace process.

Netanyahu, the way he sees it, has managed to safely avoid the danger of an additional moratorium, and is no rush to shake up his government again. To be sure, his coalition has to deal with mid-term troubles that will accompany it as long as the various coalition parties feel the political need to demonstrate fealty to their constituents.

But there is no real threat to the coalition’s stability on the horizon. Those who hoped, as I did, that the prime minister would adopt a more moderate agenda than that around which the rightwing coalition coalesced two years ago – aided by Kadima’s readiness to provide a parliamentary safety net – have been disappointed. Netanyahu’s strategic choice indicates that even if negotiations are held in the near future on the truly fundamental issues (security, borders, refugees, Jerusalem), there will be no real breakthrough.

The picture is no more promising in the Palestinian camp. The last thing Mahmoud Abbas wants are American compromise proposals. It’s likely these would be closer to the Palestinian stance than that of Israel, but agreeing to them would place him in the position he has so skillfully avoided ever since he succeeded Yasser Arafat: required to tell his people that they must abandon their illusion of the right of return of refugees to the state of Israel.

No less troubling is the reality staring at us from Washington. During the Saban Forum, I spoke with local friends who are experts in gauging the mood shifts in the Democratic administration, the Republican Congress and American public opinion.

Their assessments were identical: President Obama has despaired of his failed diplomatic adventure in our region. His main priority now will be getting re-elected for a second term. The lesson the Democratic Party has learned from its recent beating in the congressional elections is to focus all its efforts on the domestic arena – on the faltering economy, the deepening recession and the dismaying unemployment numbers.

Therefore, even if the US government does not go as far as to adopt the repeated calls of the New York Times’ Thomas Friedman to leave the quarreling children of the Holy Land alone, those presidential energies and attention directed at our region will be focused solely on managing the conflict rather than solving it.

This is the view from Washington. Not only is the weather in the American capital freezing (minus seven degrees), but so too is the diplomatic process between us and our Middle East neighbors.