In this post, I am not going to go back to the distant history of Israel, nor will I talk about the origin of modern Israel. In fact, these histories are largely irrelevant, used only to justify the inflexible attitudes of all actors in this drama. Instead, and more importantly in my view, when thinking about resolving the Israeli-Palestinian conflict, we need to talk about the constraints facing the leadership in Israel, Palestine, the Arab states, and the United States.
First, let us talk about the Israel-Palestinian relations. Basically, the Israelis don't mind a Palestinian state around them, and polling since Oslo actually shows a growing acceptance of a two-state solution. Trade between Israel and Palestine was increasing after the Oslo agreement, until suicide bombings committed by Hamas and the Islamic Jihad frayed the trust, causing the Israelis to elect the hawkish Benjamin Netanyahu in 1996. Having been elected under the promise of more security, Netanyahu simply ignored the Palestinians and imposed check points, etc., to improve Israel's security, and in turn caused massive economic hardship among the Palestinians, further poisoning the atmosphere.
On the Palestinian side, years of oppression and discrimination by the Israelis caused a massive distrust to Israel government. Yasser Arafat's misguided support for Saddam Hussein's invasion of Kuwait in 1991 further worsened the situation, as many Palestinians workers in the Gulf Coast states were expelled, depriving the population of a significant income and increasing the poverty rate. While trade improved after Oslo, massive corruption and economic mismanagement by Arafat and his cronies in the PLO ensured that the economic growth remained low and the wealth gap between the elites of the Palestinian Authority and the rest of the population widened.
At the same time, Arafat faced a major challenge, especially from Hamas, which was seen as more responsible, thanks to their social services, such as free health care. In order to distract people's attention from his economic mismanagement and to prevent the Hamas from taking over the nationalistic banner, Arafat became belligerent and even, according to Mahmoud Zahar, a leader of Hamas, ordered, or most likely agreed with other Palestinian factions, to launch attacks on Israel, including using suicide bombers.
These developments in essence was the cause of the impasse in the negotiations. The Israelis couldn't trust the Palestinians anymore, because to the Israelis, they believed they bent backward to give the Palestinians many things, including even giving up part of their spoils of victory from the 1967 war. The attitude of the Israelis then shifted, as they cared less what the Palestinians did or wanted and ramped up their focus on national security.
A quick look at the composition of Israel's parliament (Knesset) can be pretty illuminating for those who want to understand the Israeli politics. At this point, Benjamin Netanyahu's center-right coalition controls 66 seats, leaving 54 seats for the opposition. Netanyahu's Likud, however, is not the largest party in the parliament. That position belongs to Kadima, a party created by Ariel Sharon before he suffered an incapacitating stroke. Kadima in essence is a "catch-all party," getting its support from conservative members of the left-wing Labor party and liberal members of the conservative Likud party. Kadima's position on the peace process is right in the middle of Labor's idea of a complete unilateral pullout and Likud's consolidation of strategic outposts to ensure Israel's security.
Netanyahu's coalition is basically based on parties that opposed a unilateral pullout, which also includes parties who want to create a "Greater Israel," or what we would call them, the far right parties. With the coalition controlling 66 out of 120 seats in the parliament, Netanyahu's option to give concession is severely limited. Moreover, his alternatives are limited: there are no other parties that Likud can ally with to withstand defections. This is basically a logrolling coalition, hoping to survive by going to the extreme position to keep everyone on board.
At the same time, Mahmoud Abbas, the leader of Palestine Authority, is also not in the mood to give concessions. The Palestinians population loathes the PA due to its corruption and mismanagement. In fact, Hamas' electoral victory in 2006 was a protest vote, as a rebuke to the PA, not because people loved Hamas. With economy still in doldrums, mostly due to corruption and Israel's blockade on the Palestinians, Abbas can only rely on his nationalistic credentials, which are pretty much nil.
Abbas needs to show to the Palestinians that he has guts, that he is willing to stand for Palestinians' rights against the Israelis. His rapprochement with Hamas is based on this calculation, that he can pressure the Israelis to give the kinds concessions. The problem is that the domestic politics of Israel prevents Netanyahu from giving concessions.
This brings us into the third set of actors, the Arab States. I may be playing with fire here, but frankly, I don't think the Arab states are really concerned about the Palestinians. Had they really cared, they would have offered residency to the refugees, allowing the refugees to improve their economic lot. The problem with such a policy is that the Palestinians don't share any tribal ties with and loyalty to the Arab states. The autocrats would rather share their power with trusted members of their tribes. Moreover, a huge influx of Palestinians would alter each country's demographics, causing both political and economic instability. Therefore their policy is to keep the Palestinians in the refugees' camps, stoking their anger toward the Israelis.
Of course, many Palestinians still have the desire to return to their ancestral land. Such desire, however, is always there, at least in part, because their current condition is so wretched. Had the Palestinians been allowed to work and prosper in other states, I'm not so sure they would demand the rights to return.
Finally, the United States has a very horrid record in reconciling both the Israeli and Palestinian sides. John Mearsheimer and Stephen Walt's argument is correct to some degree, that the Israel Lobby in the U.S. is important in shaping American policy toward the region. They, however, are incorrect in specifying what kind of impact the Israel Lobby has. The Lobby's biggest problem is in creating an incentive for every single politician in the U.S. to take a completely pro-Israel position. Instead of the Lobby dictating the US foreign policy, what happens is that the U.S. politicians try to become "more Catholic than the Pope" in trying to solicit campaign funds from Jewish people, groups, and organizations.
Another cause of the US' horrid track record is the ego and (in)attention of the presidents. Bill Clinton's attention to the Israel-Palestinian problem was driven by his desire to get international recognition and a Nobel Peace Prize, causing him to rush negotiations, and this weakness was exploited by Arafat. George W. Bush had the potential to solve this problem, but he was distracted by the Iraq war and by a romantic vision of Israel as the bastion of democracy, making him unwilling to push the Israelis too far. Furthermore, it didn't help that he was distrusted by the Palestinians and the rest of Arab world.
I don't buy the argument that Obama is anti-Israel. I think he simply doesn't care about Israel. For Obama, what's really important is his domestic agenda and his image. He didn't give attention to Israel in his first year because he was preoccupied by the health care debate. Now, he is only involved to fend off the fallout from Mitchell's resignation and to prevent a highly embarrassing vote in the UN General Assembly.
How to cut the Gordian knot that has troubled the region for decades? The Arab Spring actually creates the opportunity to fix the Palestinian problem once and for all. The Arab Spring took out or destabilized the autocrats that rule the Arab states. In fact, this is one of the main reasons why Abbas is pushing the issue of Palestine. So the Arab Spring doesn't hit him, Abbas distracts the population by using Israel again as a pinata.
What the U.S. has to do is engage the youth generation that finds a freedom after this wave of revolution stabilizes. Obama needs to start talking in substance, no longer in poetry. He has to show sufficient leadership to helping Tunisia, Egypt, and other countries in their transition from authoritarian to democratic rule. At the same time, the U.S. must pressure Arab states to increase the economic opportunities for the Palestinians.