During the last two years, the Israeli-Palestinian peace process has suffered serious setbacks. Other than for a brief, fleeting moment, Israelis and Palestinians have had no direct political contact and there is little hope, for now at least, that this will change. Any faith Israelis and Palestinians may have in the possibility of an agreement is collapsing.

The US, sponsor of that process, has seen its credibility badly damaged. The Obama administration was repeatedly rebuffed—by Israel, from whom it had demanded a full halt in settlement construction; by Palestinians it pressed to engage in direct negotiations; by Arab states it hoped would take steps to normalize relations with Israel. An administration that never tires of saying it cannot want peace more than the parties routinely belies that claim by the desperation it exhibits in pursuing that goal. Today, there is little trust, no direct talks, no settlement freeze, and, one at times suspects, not much of a US policy.

Less visible but equally grievous is the growing loss of interest in negotiations on the part of Israeli and Palestinian leaders. Two years ago, Mahmoud Abbas, the president of the Palestinian Authority, was somewhat confident that, with a strong US push, Israel could be convinced to reach a historic deal. Since then, his confidence has been fading. Benjamin Netanyahu began his prime ministership in March 2009 with an ambivalent commitment and apparently little motivation to reach a peace deal with the Palestinians. During the period that followed, his commitment and motivation significantly diminished. For both leaders, facing publics more disenchanted than they are, it has become a political liability to project belief that negotiations can yield something. Without genuine engagement by the leaders, progress in the talks—direct, indirect, or otherwise—will be unattainable.

The current impasse has exposed a problem that runs deeper than misjudgments and missteps. Almost two decades after the peace process was launched, little remains of the foundational principle that each side has something of value to which the other aspires and thus something it can offer in exchange for what it wants. Israel holds a monopoly over all material assets. It controls Palestinian land, natural resources, and lives. Israel’s economy is flourishing, its security for now seemingly assured. Its occupation of Palestinian territories is subsidized by Western powers that purportedly seek its end. Although not as satisfactory as Israelis would like, the status quo is not as unpleasant as their adversaries would wish. Israel has become accustomed to the way things are.

In the hope of alarming Israelis, some Palestinians toy with options they haven’t seriously considered, don’t believe in, or cannot implement. To compensate for the asymmetry with Israel, Palestinians bank on US involvement, which has constrained Palestinian maneuvering without seriously influencing Israeli actions. The lopsidedness has only been made worse.

Unless they can find a way to reclaim the initiative, Palestinians risk losing the ability to shape events. The US has an important part to play, but so far it has done more to demonstrate the limits than the extent of its influence. Decisions about the future now lie in Israel’s hands. What once was a three-way spectacle has become Netanyahu’s one-man show.

Whether Israelis wish for a resolution is not the central issue; one can assume they do and still question why they would want to take risks and provoke deep internal rifts when there is no apparent urgency to do so. The principal question for Israelis is no longer how to resolve the conflict with the Palestinians. It is why and at what cost.

2.

President Abbas has a problem. He is attempting to persuade Israel to make peace with a party with which it no longer is at war—at odds, in dispute, even in conflict, but for now and the foreseeable future, not at war. This quandary lies at the core of Abbas’s belief and strategy: that Israel can be convinced through engagement of the need for a historic compromise that meets Israeli and Palestinian fundamental interests.

The Palestinian leader’s rejection of violence is not an expression of naiveté or a version of pacifism. It is rooted in his experience as a leader of Fatah and its now defunct armed struggle, experience that makes his belief more secure and his creed more credible. He is convinced that, for Palestinians, force has exhausted its utility and that his way, based on enlightened self-interest and the power of persuasion, ultimately must prevail because there is no other.

Israelis feel less threatened by Palestinians than at any recent time. They are sheltered behind a separation barrier, protected by an aggressive military force, and aided by the PA’s own security services. Palestinians are exhausted, in search of a respite, not a fight. The priority for Fatah and Hamas seems to be to fight each other, not to coordinate struggle against Israel.

Should negotiations between Palestinians and Israelis progress, and Hamas feel that it is sidelined, it might be tempted to resume attacks. So far, however, Hamas’s military inclinations have been held in check both in Gaza, where it holds power and bears responsibility for its constituents’ welfare, and in the West Bank, where its power has been crippled under the combined weight of Israeli and PA security forces.

Virtually everything about mainstream Palestinian politics—its makeup, political methods, sources of support, and diplomatic outlook—argues against a return to armed struggle. Violence would compromise the foreign support upon which the Palestinian Authority has become dependent. It would imperil its effort to build the institutions of a proto-state, which is its most important international selling point, and would threaten the economic and security progress that has become its most potent argument.

Much the same could be said of nonviolent forms of resistance to the Israeli occupation such as peaceful demonstrations that—notwithstanding periodic expressions of support from the PA leadership—at heart are incompatible with a West Bank strategy that hinges on Israeli goodwill. The occupied territories are far from enjoying quiet or normalcy. But for the most part and for the time being, they convey the appearance of both.

3.

Palestinians have looked for other nonviolent options. It’s a curious list: unilaterally declaring statehood, obtaining UN recognition, dissolving the PA, or walking away from the idea of negotiated partition altogether and calling for a single, binational state. Not one of these ideas has been well thought out, debated, or genuinely considered as a strategic choice, which, of course, is not their point. They are essentially attempts to show that Palestinians have alternatives to negotiation with Israel even as the proposals’ lack of seriousness demonstrably establishes that they currently have none.

Of these suggestions, arguably the most promising is to seek international acceptance of a Palestinian state on the 1967 borders. In the past few months, several countries have recognized such a state and others may follow. The trend is causing Palestinians to rejoice and Israelis to protest, which only makes Palestinians rejoice all the more. Further recognition almost certainly, and understandably, would be seen as a significant achievement and boost Palestinian morale. Should European nations join the list, it could possibly provide the jolt that will force Israelis to reconsider their options.

What it will not do for now is materially affect the situation on the ground. Palestinians would not enjoy greater sovereignty, their capital-to-be in East Jerusalem would still be occupied, the fate of Palestinian refugees would remain unaddressed. Their initial shock overcome, Israelis might see an advantage: as Palestinians and the international community celebrate the birth of a state and focus on the minutiae of building its institutions in the roughly 40 percent of the West Bank under PA control, pressure to resolve outstanding issues—drawing final borders, dividing Jerusalem, or bringing justice to the refugees—could wane and Israel could be provided with the opportunity to pursue its own unilateral inclinations.

Invoking a one-state solution in which Jews someday no longer will form a majority has its own limitations. The argument is familiar—in the absence of a two-state solution, Israel will face a stark choice: remaining Jewish by denying its Palestinian population the right to vote and thus no longer being democratic; or extending the suffrage to all, in which case it no longer will be Jewish. The only way to avoid this fate, according to this view, is to achieve a two-state solution.

Demographic developments undoubtedly are a source of long-term Israeli anxiety. But they are not the type of immediate threat that spurs risky political decisions. Moreover, the binary choice Palestinians, Americans, and even some Israelis posit—either a negotiated two-state outcome or the impossibility of a Jewish, democratic state—assumes dramatic and irreversible changes that Israel would not be able to counter. Yet Israel possesses a variety of potential responses. Already, by unilaterally withdrawing from Gaza, former prime minister Ariel Sharon transformed the numbers game, effectively removing 1.5 million Palestinians from the Israeli equation. The current or a future government could unilaterally conduct further territorial withdrawals from the West Bank, allowing, as in the case of Prime Minister Salam Fayyad’s West Bank government, or compelling, as happened in Gaza, large numbers of Palestinians to rule themselves and mitigating the demographic peril. The options, in other words, are not necessarily limited to a two-state solution, an apartheid regime, or the end of the Jewish state.

4.

Salam Fayyad has another idea. He wants to demonstrate that Palestinians can put their finances in order, restructure their security forces, end attacks against Israelis, and build the foundations of a state alongside which their neighbors could live in security, thereby removing any possible reason, sincere or disingenuous, that Israel might have to object to the establishment of a Palestinian state.

Questions have been raised about what a government that rules by decree, with little democratic legitimacy—parliament has not met in years and elections are long overdue—has done to build democratic institutions. Many grumble that Fayyad has conquered the West through his demeanor rather than substantive deeds. Some challenge his claim to self-reliance, noting that his project relies almost entirely on Western support and Israeli goodwill. They contend that most of the West Bank’s economic growth can be attributed to large-scale foreign aid and that such economic growth has little to do with productive, self-sustaining economic development. Others protest that his security forces violate human rights and cooperate with the occupier to stifle resistance to the occupation. Still, his ideas and how he puts them forward have gained appeal.

Fayyad’s approach represents a break in the Palestinian national movement. Their many differences aside, Arafat and Abbas were rooted in a time when the movement was in exile and aimed to fulfill the national aspirations of the entire Palestinian people; a time when material well-being and state-building were not the central—perhaps not even particularly important—components of its demands. Day-to-day issues of governance essentially left them cold, which is why they left them to others.

Arafat and the movement he embodied dreaded normalcy. To settle into the humdrum of everyday life would, they felt, threaten their existential struggle. If Israel could get Palestinians to manage their own affairs, provide security, and ensure their people’s welfare, why would it or anyone else bother to address deeper Palestinian demands? For the national movement’s founders, unsettledness—the constant experience of an open, bleeding wound—was paramount for reaching a resolution.

Although, like Arafat, Fayyad values steadfastness, he has a very different notion in mind. For Arafat, it meant staying put. In dealing with Israel, his pace was unhurried, his patience seemingly infinite. For Fayyad, it means incessant activity—planting a tree, building a road, inaugurating a building. What matters to him is what he can directly and concretely affect. Nor does he have much interest in grand diplomacy, at least not right now. That he will gladly leave to Abbas—ostensibly because it is not within the PA’s purview, although the loud if often unspoken implication is that it is all a huge waste of time.

Can Fayyad’s approach work? Many Israelis think so and many Palestinians think not, which has them both equally worried. Israeli praise for Fayyad often barely conceals apprehension. Israelis don’t so much mind what he is doing; in many ways, it is reminiscent of Netanyahu’s much-vaunted “economic peace.” But they mind where it might lead. Having accomplished what he could under conditions of occupation, and having secured unstinting Western support, he will, many Israelis imagine, then turn to his foreign backers for help in achieving Israel’s withdrawal on less than favorable terms.

Some Palestinians suspect the strategy could lead to a state of their own but they are not so sure that would be a good thing. Like the idea of declaring a state or having it recognized, building one on the parts of the West Bank the Palestinians already control carries risks. By normalizing the situation on the West Bank, it could enable the perpetuation of the status quo at low cost and with diminished international attention.

Fayyad hopes that the world will not stop halfway, and that Palestinian accomplishments will provide the momentum for a forceful international effort to resolve all remaining issues. But history is not in the habit of rewarding good behavior; it is a struggle, not a beauty contest. If Palestinians have a state or its equivalent and are celebrated worldwide, if West Bankers can enjoy the fruits of greater self- governance and economic prosperity, then any international drive for tackling the core issues might well fizzle. The priority, at that point, would be to consolidate what has been achieved rather than jeopardize it by reopening more thorny subjects. A profound emotional conflict between two national movements could be transformed into a tedious, manageable interstate border dispute. The greater danger to the Palestinian cause, according to this view, is not the absence of a state. It is the premature creation of one.

5.

Palestinians face the threat of being stripped of the ability to promote their cause and of the attributes of an independent national movement. They are warned by the US against embarrassing Israel in public forums. The stability of Palestinian rule in the West Bank rests in part on Israeli security forces. Palestinians seem to have subcontracted decision-making to Arab nations. They have become dependent on Western donors’ financial largesse and accountable to their judgment. Captive to foreign benefactors, more responsive to external stimulus than domestic pressure, the Palestine Liberation Organization—the Palestinians’ governing political body—risks making choices at odds with popular Palestinian aspirations. An eventual decision to sign a peace agreement could suffer if Palestinians suspect that such a deal has been reached under external duress rather than through the exercise of free choice.

Half a century after its birth, the modern Palestinian national movement is being drained of politics. Its main source of energy has become primarily financial, which is why access to funds and management of their flow is so vital. Arafat was as adamant about controlling finances as he was about controlling weapons and most other things, but money for him was a means of promoting his particular political vision. He sought assistance from many in order to be beholden to none. Today, Palestinians must be sensitive to the political requirements of their respective donors lest the financial stream dry up. Appearances aside, the fortunes and fate of Fatah, Fayyad’s endeavors in the West Bank, and Hamas’s in Gaza chiefly ride on who has the money and what or whom it can buy. With few exceptions, the concern is not with politics. It is with whether the next check will arrive on time. Politics has become subservient to finance.

Palestinians who seem to have scant confidence in themselves have put their hopes in the US instead—an investment that reflects excessive faith in Washington and insufficient knowledge of history. There is no precedent for a successful start-to-finish American effort to bring about peace in the Middle East. All such endeavors that came to something initially were rooted in local dynamics that the US could influence but did not produce. Nor are there notable examples of the US forcing an Israeli government to take sustained action that it believes to be fundamentally at odds with its core interests.

US mediation has also inevitably blurred the two sides’ vision, distorted the nature of their bilateral dealings, and—intentionally or not—enabled the status quo to be perpetuated. However vehemently they may deny it, Palestinians secretly latch on to the belief that the US will someday save them; Israelis cling to the notion that the US will forever protect them. Too often, both display greater interest in gaining America’s support than in persuading each other.

Barack Obama rekindled Palestinian faith in America and, for a while, sustained it. But disappointment was unavoidable. Netanyahu cannot afford to jeopardize strategically critical ties with Washington and must try to avert prolonged crises. Still, during the past two years, he has learned that he could handle friction with the administration, withstand its pressure, and come out none the weaker. Out of disagreements that Washington hoped would rally Israelis against their prime minister, Netanyahu emerged largely unscathed. Most Israelis don’t like fighting with an American president but, it turns out, many dislike being told what they can and cannot do even more.

The Obama administration learned its lessons too. Grudgingly, it concluded that it was wiser to work with Netanyahu than against him, that there is only limited strategic utility in—and, on the American domestic scene, limited political patience for—repetitive skirmishes with Israel. In a war of attrition with the US, Netanyahu could well prove the more resilient.

In making up with the prime minister, the administration partly addressed its problem and partly compounded it. Netanyahu has become the arbiter of Obama’s pro-Israeli credentials as much as Obama can be the judge of Netanyahu’s pro-peace qualifications. The President’s credibility now partly rests on validation from the very man he someday might want to pressure. The US administration has issued pronouncements—for example, that Israel alone could determine its security requirements—that will render any eventual US peace proposal harder to defend and Israeli objections easier to justify. It also has become more difficult for the President, whose relationship with Netanyahu went from excessively cold to excessively warm, to switch his stance once again without appearing excessively confused or excessively disingenuous.

Palestinians have tended to bemoan periods of strong US–Israeli relations and take satisfaction at the first signs of froideur. But tension between the two countries does not automatically translate into Palestinian gains; more often, it leads to reinvigorated US attempts to repair frayed Israeli ties. Palestinian depression when the relationship between Israel and the US is smooth and jubilation when it is rocky is not a political strategy. It is a pointless exercise.

6.

Without resolving its conflict with the Palestinians, Israel has for the moment taken care of its Palestinian problem. Israel’s anxiety may be growing, but what it worries about no more derives from the Palestinians than what it wants can be provided by them. Its concern arises from being unwanted, from the abiding sense that the Jewish presence in the Middle East is regarded as fleeting. Israelis perceive this in the world’s outraged reaction to the Gaza war of 2008–2009 or to the raid on the Gaza-bound flotilla last May; in tensions with Turkey, with whom it had friendly relations until recently; in growing calls to boycott or divest from Israel; in their leaders’ reluctance to travel to Europe for fear of criminal prosecution; in what they have come to call delegitimization. If, in the eyes of many Arabs, Israel acts as if it were above the law, in the eyes of its own Jewish citizens it is treated as if it were perpetually on probation.

The conflict Israelis have come to care about is not with the Palestinians; it is with the rest of the world. The deal that interests Israel is one that would result in a dramatic change in its condition that only non-Palestinian actors can produce. From the US, it seeks wide-ranging security guarantees and assistance; from the Arab world, the granting of collective normalization; from Jordan, a more active role in the West Bank and acknowledgment that it will become Israel’s de facto first line of defense; from Syria, a strategic shift away from Iran, Hamas, and Hezbollah; from the international community, recognition of Israel’s permanent borders and its right to self-defense. Whether it ever can fully obtain these is open to question; whether it can attain them in the absence of a final agreement with the Palestinians is not, which in part is why Israel is drawn to the negotiating table even as it questions it. Israel might have dealt with its Palestinian problem but has yet to deal with the problems the Palestinian problem has spawned.

It won’t be easy to transform this innate Israeli unease into an impetus to compromise when the cost of that compromise, in many Israeli eyes, is viewed as high. The last, untidy two years have only made matters worse. Coming into office, Netanyahu contemplated some reasons to move forward: he feared US and international pressure, didn’t know how long Palestinian quiet would last without political progress, and believed he might sway Abbas with new ideas. Perhaps, too, history beckoned: the prime minister could be the first to bring normalcy and security to a nation that has lacked both.

That picture has changed. Netanyahu disregarded demands from the US and others without paying a serious price. The West Bank is as stable, the Palestinians as divided, and the Arabs as feckless as ever. From his few meetings, Netanyahu also came to understand that Abbas’s long-held views on a final status deal were not mere negotiating stances but definitive positions from which he will not budge. The lure of history is being countered by the pull of politics: the more time elapses, the greater Netanyahu’s fear of alienating his right-wing coalition partners and the more distant the idea of achieving a groundbreaking peace. Nothing concentrates the mind of a canny politician like electoral arithmetic.

In this setting, temptation has grown to increase international pressure on Israel and heighten its discomfort. If it is delegitimization Israelis fear, then it must be delegitimization that will make them budge. Faced with the prospect of isolation, Israel might be persuaded to end its occupation. But pressure is a double-edged sword requiring skillful handling, especially when exercised on a people convinced by the calamities of their own history of the inveterate hostility of much of the outside world. Those who wield it often only confirm in Israeli eyes how unreliable their avowed friendship was in the first place. One should not be surprised if the Israeli people, their sense of vulnerability enhanced, opt to hunker down rather than reach out.

Waiting for different leaders is unlikely to yield a more promising outcome. A less right-leaning Israeli government might emit the appropriate sounds yet it will find it hard to deliver the appropriate outcome. The large array of forces today represented in the coalition, embittered and betrayed, could pose a far more formidable obstacle to a peace deal once they were out of power. Signed by the left, an agreement would likely mobilize the right in opposition; signed by the right, it almost certainly would co-opt the left in support.

Like Netanyahu, Abbas too is becoming disenchanted. Even at the worst of times—when Israelis and Palestinians were caught in the throes of violence; when he was excluded from the active leadership; when more militant groups gained the upper hand—he kept faith. This time is different. His life’s project, he feels, is slipping away. But he is the lone surviving leader from an era when the Palestinian movement was credible. He is the last Palestinian, for some time to come, with the history, authority, and legitimacy to sign a deal on behalf of all Palestinians that could end the conflict.

There may be potential successors, though none with the legitimacy required to straddle geographic and political divides. Some will focus on state-building, others might seek to revert to resistance; most will be adrift. Hamas waits in the wings; the diaspora is beginning to stir; East Jerusalemites and Palestinian citizens of Israel are more active. So far, however, none of these groups has the means to match its ambitions. The national movement might reassemble but it will take time. In the interim, it is likely to express itself in numerous disparate parts.

For seventeen years, the peace process has been fueled by illusions. Bilateral negotiations have cultivated the pretense that Israelis and Palestinians are equal parties when they are not. US involvement has fed Palestinian delusions and shielded Israel. The international community’s treatment of the PA as a quasi state has not brought Palestinians closer to statehood. It has deceived Palestinians about what to expect from the world and corrupted their politics. Throwing money at the Palestinians has not ended the occupation but made it more palatable: it has reduced Israeli costs and created a Palestinian culture of dependency, diverting Palestinian energy from addressing their predicament to financing it. The illusions helped perpetuate the status quo.

This probably is not what the world had in mind when Obama took office. It certainly is not what the Palestinians believed history had in store. But it won’t get any better anytime soon.