In late August, when Israeli and Palestinian leaders agreed to the Obama administration’s plan to renew face-to-face negotiations without preconditions, most opinion makers reacted with deep skepticism. So anxious were the editors of the New York Times to declare the talks all but dead-on-arrival that they led with a dismissive article labeled “News Analysis”—the first time in my memory that the paper had deliberately used an analytical piece as a vehicle to debunk the hard news that followed. The analysis summarized the opinion of most Middle East experts who quickly lined up to dub the negotiations a frivolous confrontation between an Israeli leader who wants no agreement and a Palestinian leader too weak to get one.

Prior to my most recent visit to the region this June, my own instincts would have mirrored those of my colleagues in the media. I had covered Israel for ABC News from 1984–86 and had returned to the area on writing assignments three times between 2002 and 2007. Like many other journalists, my experiences in the region had produced a sense of hopelessness. After all, this conflict has survived war, peace negotiations, terrorist assaults on civilians, an authorized suicide bombing campaign, presidential arm-twisting, even proximity talks. So it was with no great optimism that I undertook another journey to the area this summer. I was surprised at just how different the situation on the ground looks and feels than it did on any previous visits. And although I returned well versed in the reasons to be skeptical of an agreement, I part company with colleagues who believe the upcoming talks will settle nothing.

So what is different now? I offer the following observations based on a large number of interviews with senior diplomats, government officials, legislators, and negotiators on both sides, most of them working for peace with a new urgency:

• The Israelis and the majority Fatah wing of the PLO now share a vital interest in the containment of Hamas—the Iran-backed radical Sunni group—which, during the summer of 2007, violently seized control of the Gaza Strip.

• Recognition of this interest has already produced significant cooperation in such matters as intelligence, the apprehension of suspected terrorists, and the training and equipping of Palestinian security forces.

• Led by the widely respected Prime Minister Salam Fayyad and others, the Palestinian Authority (PA) is finally developing an infrastructure of statehood that has generated cautious hope among many Israelis that a Palestinian regime could be a source of stability and democratic values in the region.

• The parties are much closer to agreement in such key areas as refugees, land swaps, and post-accord security arrangements than has been generally reported. In addition, Israeli Prime Minister Benjamin Netanyahu, who in the opening weeks of his administration evidenced ambivalence about the two-state solution, is now firmly on board.

• Finally, after more than a year of erratic diplomacy, the Obama administration now appears to appreciate the necessity to the peace process of face-to-face negotiations. Issues such as the move of Israeli Jews into contested East Jerusalem may rankle, but the White House seems to realize that at this stage of affairs, giving the parties excuses for avoiding such talks is counterproductive.

One of the most illuminating discussions I had on my trip was with a senior Israeli military intelligence officer whom I had first met in 2007. He told me that he saw both good news and bad news regarding the Palestinians. The good news: “There is cooperation—tactical, military, and with civilian infrastructure” and “the PA has established order with troops trained in Jordan.” The bad news: “We cannot implement peace because [the PA] does not have Gaza . . . the PA is not capable of taking back Gaza unless we do it for them, which we don’t want.” Reclaiming Gaza is indeed a necessary step for any Israeli-Palestinian agreement to take hold. But both Israeli and Palestinian optimists argue that it need not be the first step.

More immediately, the theme of close cooperation between Israeli and Palestinian security officials is echoed by senior figures on both sides. United by a common enemy (i.e., Hamas), the two longtime adversaries appear to be building a de facto alliance even before the old epithets go out of style. My military intelligence source expressed concern that the failure to reach agreement with moderate Palestinians on a future state could bring vital Israeli facilities within range of hostile fire: “We are very close to a Palestinian state, so we cannot fail again. If we get two rockets everyday at Ben Gurion we are done.”

The overlapping strategic interests of Israel and Fatah extend from Hamas to an Iran armed with nuclear weapons. Israelis overwhelmingly regard this as an “existential” issue. The overwhelming consensus is that if the United States fails to take decisive action, Israel will—beginning with strikes against the Iranian nuclear enrichment facility at Natanz and its uranium conversion plant at Isfahan. Former British Prime Minister Tony Blair, who has developed close ties with both Israeli and Palestinian leaders while serving as Europe’s representative in Jerusalem, took a similar view of Israel’s likely response in a cell phone conversation he had with me as he drove through the West Bank: “Personally, I think Israel would not allow Iran to get nuclear weapons.” Sunni regimes in the region secretly hope that this is true. Ironically, it may be Israel’s nuclear umbrella that shields some of its conservative regional colleagues from Iranian attack, completely revamping the region’s strategic picture.

I was also fortunate to meet with Yasir Abed Rabbo, the diminutive, chain-smoking Palestinian veteran of more negotiating sessions with Israelis than he can count. Referring to the productive 2007 talks between President Mahmound Abbas and Prime Minister Ehud Olmert that were torpedoed by corruption charges forcing Olmert’s resignation, Abed Rabbo claimed, “The offer from Olmert was the ’67 borders with a 6.5 percent land swap. We offered about two percent but Olmert didn’t say anything.”

In fact, Olmert had plenty to say. He and Abbas met for face-to-face talks on some thirty-five occasions with significant progress made on such key issues as the division of sovereignty in Jerusalem along religious lines with holy places subject to international administration, and a broad right of way in the form of a tunnel linking Gaza to the West Bank. Had Olmert escaped the relentless criminal investigators, we might today already be examining the provisions of a negotiated settlement, although like most Palestinian Authority veteran negotiators, Abed Rabbo bitterly recounts the impact of Israeli West Bank settlements on the issues under discussion: “It’s as though you ask me to sit and discuss the future of this table, but as we talk you are slicing away the pieces of the table.”

The question of post-accord security for Israelis dominates every discussion of a deal with the Palestinians. The transition from Bush to Obama does not appear to have produced any significant glitches in the critical area of permanent security arrangements. First outlined by Condoleeza Rice, and later fleshed out by General James Jones, Obama’s national security adviser, all key points of the plan have been presented to both sides without any deal-breakers becoming apparent. Under the Rice-Jones plan, Palestine would become a “demilitarized state with a strong police force.” As summarized by Abed Rabbo, “An international force would be deployed on the borders and inside the Palestinian state. No Israeli presence of any kind would be permitted inside the Palestinian state. Israel would be able to nominate members or veto the proposals of others. A member of the international force could not be removed without the agreement of Israel, the U.S., and Palestine.”

The Palestinian leadership maintains that its strategic goals dovetail with those of Israel. Both have overriding interests in neutralizing Hamas and offering the prospect of peace—and, in the case of the Palestinians, statehood—to their constituencies. Fatah in particular has done a good deal of soul-searching since its 2007 defeat in elections in Gaza, and its subsequent rout by Hamas militias in Gaza. In interviews I conducted with Fatah leaders, one after another offered the following analysis: after the second Intifada, the Palestinians wanted nothing so much as a peaceful resolution to the conflict with Israel; the removal of the burdensome Israeli presence as reflected in checkpoints, detours, closed roads, and economic misery; the opportunity to develop their own political institutions in their own way; and the development of public institutions that would enable them to reassert their own national character and identity. What they got instead was a stillborn peace process, burdened by ancient grudges and derelictions, a corrupt leadership where the instant millionaires of the PA regime prospered at the expense of their constituencies, and a government in name only—one that was unable to provide the most basic services to its people—health care, education, and security.

While both sides agree that Hamas must be dealt with, however, the question of tactics remains touchy. Most of the Israeli leadership maintains that the Palestinians themselves must dislodge Hamas before any final settlement can be achieved. But the more reflective Palestinians suggest that Israel is once again asking the PA to treat the symptoms while ignoring the disease. “How do you get rid of Hamas?” the PA’s minister of planning, Ali Jarbawi, asked rhetorically in our conversation: “Produce results in the peace process! Hamas is a symptom, not a reason. It flourishes on the lack of a peace process.” Nasser al-Kidwa, Yasir Arafat’s nephew, member of Fatah’s governing Central Committee, and for many years the quite able PLO representative to the United Nations, was equally vehement: “We lost elections because we failed to deliver on promises to our people. We failed to deliver a Palestinian state. We failed to deliver independence. The overwhelming majority of people would definitely support a reasonable settlement that offers peace that offers a better life.” Tony Blair, too, insisted that the Hamas problem would solve itself under the right circumstances. “I think to deal with Hamas you must create a strong momentum toward progress on the West Bank,” he said in our telephone interview. “You must provide Hamas a choice: either get on board the train or the train leaves without them. Hamas’s strength works in direct adverse relationship to the progress of the peace process. I am absolutely sure of this.”

Some believe Tony Blair and others have little but their optimism to support their view. Critics note, for example, that Egypt strove for months to produce a document setting forth the conditions by which Hamas could return on good terms to the Palestinian Authority. Alas, the “Egyptian Document” remains unsigned by the group.

Dissenters also see little evidence that Hamas can be made to knuckle under. Israel’s former ambassador to Germany, Shimon Stein, says, “The real question is, if we sign an agreement with Abbas, can he deliver? Can he live up to it? Can he make Hamas comply? I don’t think so.”

A senior Western diplomat who has observed the situation closely during the past five years warns, “The notion that a deal will come along that forces Hamas to go along with it, I think that vision is pretty far off, particularly given the make up of the Israeli government. Meanwhile, Hamas is getting paid by the Syrians and the Iranians. They’ll face tough consequences if they stick their necks out.”

Given the pathetic weakness of at least ten Fatah militias unable to hold their own in Gaza when pressed by the more disciplined Hamas, Israel has a legitimate skepticism about security issues that will have to be addressed before it will consider a final accord with the Palestinians. Nor will security alone fully satisfy the Israelis. Palestine needs people in positions of leadership who understand the art of governance and how to make government work, who would help constituents comprehend the workings of free institutions, and who would be prepared to declare their land ready for statehood. In Israel’s view, there can be no more Gazas, no new Islamic threats, no tolerance for those urging destruction of the Jewish state or the Jewish people.

Apparently sensing the need for a reformer with political credibility, Abbas selected Salam Fayyad as his prime minister. A mild-mannered academic type with a doctorate in economics from the University of Texas and a career spent mostly with the World Bank, and then as the IMF’s representative in Jerusalem, Fayyad has worked to reform the security structure on the West Bank during his three years in Ramallah, to work with the Israelis on the reduction of checkpoints, roadblocks and security barriers, and to persuade the occupying power to unblock millions of dollars in tax revenues collected on goods traversing the borders—efforts that have all drawn laudable international coverage.

I caught up with Fayyad on a Saturday morning in the village of Salfit, high in the hills east of Nablus. Accompanied by a caravan of perhaps a dozen vehicles, he was hopping from one small village to another, announcing government grants and sharing his hopes for better times ahead. He invited me to join him for the return drive to Ramallah.

It was clear from Fayyad’s answer to my first question—how he intends to use the power that comes with international celebrity—that he sees the task of leading his people out of four decades of occupation as paramount: “People respond to the occupation and the adversity under the occupation in two ways: one is to react with complete submission, in which case you can’t do much of anything, and the other is belligerence. In my view, they are two sides of the same coin: defeatist.” Like many in the new government, Fayyad had gone to school during the period of lawless militia violence that marked the final years of the second Intifada and culminated with the 2007 Hamas takeover of Gaza. He now embraces a doctrine of nonviolence in international affairs, and democracy at home undergirded by strong security forces responsible to the national government. “Yes I say to political pluralism, but definitely no to security pluralism,” he said with emphasis.

Fayyad has gone further in security cooperation with Israel than any previous Palestinian figure, an approach that he defends as beneficial to both societies: “Security is not only an Israeli need: it is equally a Palestinian need. And given the distances between us, it’s a small neighborhood, and a rough one at that. Security is a shared interest definitely.”

Along with Minister of Planning Ali Jarbawi and others who think deeply about the state they hope to see emerge from the negotiating process, Fayyad has been developing a body of literature to inform and instruct his constituencies. For example, the Palestinian National Authority official program document outlining its agenda, “Palestine, Ending the Occupation, Establishing the State,” proclaims that, “the state will forever be a peace-loving state that rejects violence; it is committed to peaceful coexistence with the world community of nations.” The leadership further pledges a democratic state that “respects human rights and guarantees equal rights for all citizens. Its people live in safety and security under the rule of law, safeguarded by an independent judiciary and professional security services.”

The man serving as the national chief of police in the West Bank is Hazem Atallah, a remarkably fit fifty-six-year-old Jordanian-trained former paratrooper who today coordinates closely with Israel’s military and clandestine services and calls Israelis “cousins” because, as he puts it, “We are all sons of Abraham.” In our talk he admitted that “there is coordination with Israelis,” adding, “We are not ashamed. We try to show people, do it in the sunlight because we believe it’s good for our people.”

The peace process falls under Abbas’s jurisdiction, and there have been rumors of dissention, or at least coolness, between Abbas and Fayyad. Nor is Fayyad, a member of the “Third Way” splinter party, certain to win the support from Fatah that he will need to serve another term. What is important is that Abbas and Fayyad present Palestine as a viable state, able to navigate the rapids of independence and find a way to reunite Gaza with the West Bank.

Fayyad’s internal reforms and endorsement of international nonviolence play well with many Israelis. Many cite him as the sort of Palestinian who will be necessary to the development of good bilateral relations. A number of Israeli officials have even compared him to Israel’s own founding father, David Ben-Gurion, who is credited with developing the political, military, economic, and social institutions of nationhood before full statehood itself became possible. But he has also shown a sharp tongue in criticizing Israeli actions in Gaza and at the negotiating table. He has called for Palestinian laborers to reject work on Israeli settlements, led a ban on Israeli settlement products in the Palestinian economy (making it illegal to sell hundreds of Israeli brands in Palestinian-controlled areas), and sought to mobilize European sentiment against admitting Israel to the Office of Economic Cooperation and Development. None of this has endeared him to Israeli officials.

The ultimate dangers to the peace process are, on the Palestinian side, the refusal of Hamas to retreat from its chokehold on Gaza and, on the Israeli side, the difficulty Netanyahu will face knitting together the coalition he will need to win ratification of a two-state solution given likely obstruction from his foreign minister, Avigdor Lieberman, and the defection he is almost certain to face from right-wing coalition partners. Yet Netanyahu’s problems should not be overstated. He is not without political resources. Of the sixty-one votes he will need for Knesset approval, Kadima—Ehud Olmert’s party now outside the government—could provide twenty-eight, Labor thirteen, and minor parties at least another ten. But the challenge will, nevertheless, require all the courage and statesmanship Netanyahu can muster. Those who recall the wild demonstrations and protests that attended Israel’s withdrawal from Yamit in the Sinai to fulfill its treaty obligation to Egypt, and the more recent evacuation of Gaza, undoubtedly know that at best, this will be an exercise fraught with trauma and, quite possibly, violence.

Still, there appears to be no groundswell of Israeli public opinion against the two-state solution. The implications of an Israeli state seeking to control an Arab population several times its size is not lost on Palestinian observers. For example, Ali Jarbawi, the minister of planning, asks, “Do I have to advise the Israelis, ‘Take the two-state solution, because in twenty years, you’ll be a minority and have to oppress us like apartheid, and in one hundred years you won’t exist?’” Even some Israelis—diplomat Shimon Stein among them—acknowledge that more could be done to move the process along: “The demographic issue is like climate change—no one wants to pay today for what may or may not happen twenty years from now.”

In the last analysis, history itself, although invisible, may be the most intransigent participant in the negotiations about to restart. For the better part of twenty years, Fatah and its PLO brethren dedicated their efforts to the eradication of the Jewish state, modifying their basic covenant only when physically expelled from contiguous territories or in response to game-changing regional conflicts. Meanwhile, Israel adopted a mindless settlement policy on the West Bank and elsewhere (much of it illegal under Israeli law) that created a new Israeli constituency, the settlers, now a fully empowered part of Israel’s political landscape and as extreme in their theological claim to the land as any Islamic jihadists.

Part of that history is Oslo, too, which for a fleeting moment seemed to suggest that sanity had at last prevailed. But despite the glitter of Arafat in Gaza, and vigorous handshakes on the White House lawn, Oslo dodged the tough issues, leaving them to be adjudicated in so-called “final status talks.” Progress under Oslo fell hostage to traumatic events: the assassination of Yitzhak Rabin and the debut of Hamas suicide bombers in Jerusalem. Before long, Oslo had receded from memory, becoming part of the history that oppresses rather than liberates this region. Final status talks at Camp David and Taba had broken down, and the parties had resumed an activity at which both were exceedingly proficient: killing each other.

On the face of things, the current situation might seem to promise no real avenue of escape from the tragic history that weighs upon this conflict. Tensions in the area are high. The surge in U.S. popularity occasioned by the election of Barack Obama is now largely spent. Turkey, one of Israel’s few friends in the Middle East, now appears to be turning eastward in its drive for geopolitical influence, a move accelerated by continued confrontations involving Israel’s interdiction of “relief” supplies bound for Gaza.

Yet, as I have argued, the landscape is far from bleak. Opportunities beckon for real progress in the development of Israeli-Palestinian relations. Not only would it be premature to write off this period as inhospitable to progress; it would be downright wrong.

Consider Hamas’s victory in the Gaza and West Bank elections of 2006, and the subsequent takeover of Gaza by the terrorist group. Rather than produce a general collapse of moderate Palestinian camps, the PA instead reacted in a mature fashion, concluding that its own failure to deliver the promised peace was the source of many of its political problems and recognizing the benefits of cooperating with Israel. The resulting payoff came quickly: even during the high-intensity Israeli incursion into Gaza and the emotions it spawned, the West Bank remained calm, a tribute to the new security arrangements.

A second major breakthrough occurred as the PA, recognizing that it had provided its people with few of the benefits of good governance, concluded that reform was necessary. Today, a visitor traveling the West Bank sees evidence of progress: a growing economy, a coherent scheme of security, and a leadership that talks seriously about such things as planning, education, and economic development. Palestinians of considerable ability—Salam Fayyad, Ali Jarbawi, and Hazem Attallah to name a few—are at work developing the infrastructure of statehood.

And they are realists. Take, for example, the agreement of Palestinian negotiators to accept serious limits on their military capabilities—no heavy arms or aircraft, merely a well-equipped militia to provide law and order—in exchange for Israel forgoing the right of any of its soldiers or civilians, including settlers, to be posted in Palestine.

On borders, the parties have been within striking distance of a deal for nearly a decade. Even allowing for the sensitivity of the right to return issue and its ability to blow up negotiations, it is not too much to hope that a compromise can be found if the right atmosphere prevails when talks resume.

Even those uninhibited by past failure understand how tough the road ahead will be. But there are more grounds for optimism than despair, more thoughtful participants than ever before, more on both sides committed to making things work rather than pointing accusatory fingers at their colleagues, and thus—even in a time when it has become suspect—more hope.

Robert Zelnick is a professor at Boston University and a research fellow at the Hoover Institution. He previously spent twenty-one years with ABC News, including sixteen years as a correspondent covering Moscow, Israel, the Pentagon, and Congress.

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