The Obama administration deserves credit and praise for its determination to push forward with Middle East peace diplomacy. It is very reassuring that the administration has not regarded the frustrations and false starts of 2009 as evidence that nothing can be accomplished or that efforts are being wasted. It is vital that the United States continue to pursue progress towards peace on a variety of fronts, including at the diplomatic register. However, given the extremely difficult internal political circumstances in Israel and among the Palestinians, a healthy skepticism about what can be accomplished in the near term is warranted and serious consideration of innovations and parallel tracks is required.

For all of the considerable efforts and expenditure of political capital by Pres. Obama, Secretary of State Clinton, Special Envoy Mitchell, National Security Advisory Jones and the others, last year the administration was confronted by weakened leaders on all sides who lacked either the ability or the will, or both, to make dramatic moves towards a peace agreement. Prime Minister Netanyahu is clearly hamstrung by a crazy-quilt coalition that includes several parties and many individuals to his political right. He has coalition partners he relies upon that are overtly opposed to any realistic peace agreement. Moreover, his coalition is unsteady, and he does not even have the largest party in the Knesset. So there is no doubt that his ability to maneuver is limited.

However, there are also serious questions about his intentions. Historically, and maybe still in his heart of hearts, Netanyahu is of the party in Israel that does not believe an agreement is possible, or at the very least, that if it is possible, it will not end the conflict. There are at least two factors that may, however, have shifted his perspective in recent years.

First, many right-wing Israeli leaders have reluctantly come to recognize that peace based on two states is a strategic necessity for Israel. If Netanyahu has made this psychological and political breakthrough, he would be only the latest in a long line of individuals who have come to this conclusion privately, although the critical mass to push Israel into serious pursuit of such an agreement has yet to be developed. As it stands now, and as the vigorous debate in the Israeli press on the subject reflects, it’s really not possible to know what Netanyahu currently believes about whether or not a painful, difficult but workable peace agreement with the Palestinians is a strategic imperative for Israel. No one should dismiss the possibility that he does, but no one should be sanguine about it either. He has adopted a sphinx-like posture on the subject, preferring to remain an enigma to friends, rivals and opponents.

Second, this preference for ambiguity on the part of the Israeli Prime Minister is a reflection of his character as a pragmatic and indeed opportunistic politician who has shown many times in the past that he is willing to do whatever is necessary, within limits, to acquire and maintain power. It’s been pretty clear for quite some time that Netanyahu belongs to what we might call the “deal-making class” of political actors, and this is reflected in his ability to assemble a coalition partnership that makes absolutely no sense ideologically or programmatically, but makes perfect sense in terms of political power, beginning with his own. That his ideological fervor is tempered with a pragmatic sense of bowing to what is necessary was also demonstrated during his first tenure in office on several occasions. That Netanyahu is at heart a hawk, and expansionist and a greater-Israel ideologue is really not open to question. The question is, does he now or will he come to see that a reasonable, workable peace agreement with the Palestinians is essential to either his own interests or his country’s, or both? Such a conclusion is by no means difficult to imagine, even if it cuts against the grain of deeply-seated inclinations.

Netanyahu’s calculated ambiguity on his intentions regarding peace with the Palestinians is a reflection of both his own pragmatism and the political cost of having an unambiguous position either way. There would be a heavy political price to pay with his right wing coalition partners if he were to seriously and unambiguously embrace an agenda that pursued a workable peace agreement, since this would involve a willingness to compromise on shibboleths and cross the Israeli far-right’s red lines. On the other hand, it’s clear that the Obama administration has no patience for an Israeli position that unambiguously rejects the concept of a two-state peace agreement with the Palestinians, and Netanyahu’s highly attenuated and apparently reluctant acceptance of this principle a few months ago was plainly designed to appease the United States. So was the limited, temporary, partial and semi-fraudulent settlement freeze that is now ongoing, for what it’s worth. These measures go further than Netanyahu ever has in the past, or suggested he would, but they’re not obviously reflective of a government that has a real commitment to seriously pursuing a peace deal.

So in the case of Netanyahu, one can easily see the political limitations on his ability to pursue serious measures that advance peace, and one can easily argue and be forgiven for strongly suspecting that his fundamental attitudes have not, in fact, shifted. On the other hand, there are also firm grounds for suspecting that if he becomes convinced that pursuing peace is a political necessity, he would be willing to do so. It’s by no means inconceivable that in a different coalition, or with a different diplomatic or strategic environment in place, Netanyahu could, as many other right-wing Israeli politicians have in the past, surprise both friend and foe alike. But don’t hold your breath.

Regarding the intentions of the senior PLO and PA leaderships, there can be no serious doubt. They have based their entire political as well as diplomatic strategy on negotiations and peace, gambled everything on this hand and doubled down on it too. The status quo, although some on the Israeli right like to kid themselves about this, is not something the Palestinian leadership can live with for very long. The nationalist leadership is in a zero-sum competition for political authority in the Palestinian national movement with Islamists led by Hamas. These two factions agree on virtually nothing, including the national strategy for liberation and the future of Palestine, as well as the nature and character of Palestinian society. If the peace-oriented strategy of the PLO were to decisively fail over the coming decade or so, there is almost no question that the outcome would be the collapse, marginalization and possibly even disappearance of the PLO itself, or at least as we have known it, and its replacement by Hamas and/or other Islamists. Therefore, both in terms of their personal and ideological inclinations and because of their political interests and indeed survival, the commitment of the Palestinian leadership to a peace agreement can’t really be seriously doubted.

However, its political strength, authority and ability to take bold, decisive actions that show leadership and incur significant costs are all in question. The new PA security forces have done a lot to deliver security to the Palestinian public where they operate and to live up to Palestinian obligations under the roadmap, and progress has been made on numerous other issues in the West Bank. However, the leadership was obviously badly weakened over the past few years due to its irreconcilable differences and wide-ranging confrontation with Hamas, and the loss of power in Gaza.

2009 was a very complicated year for the PLO. For the first six months, the organization and especially Fatah party enjoyed a resurgence of credibility, popularity and authority based on guarded optimism springing from the Obama administration’s re-engagement with the peace process and push for a settlement freeze, and the extremely successful Fatah General Party Congress in Bethlehem. Unfortunately, the last six months of last year involved a series of severe blows to the PLO’s credibility and popularity and its internal political standing in Palestinian society. The Obama administration’s failure to achieve a full settlement freeze followed by its insistence of a Palestinian return to negotiations without a meaningful freeze resonated damagingly with deep-seated cynicism about the peace process, Israel’s intentions and the American role among Palestinians at the expense of the credibility of the PLO. The Goldstone report fiasco — which was partly a result of the unavoidable contradiction between the Palestinian leadership’s diplomatic imperatives on the one hand and domestic political necessities on the other, and partly due to their own prodigious mishandling of the affair — proved another extremely damaging blow. The last straw was probably Secretary Clinton’s poorly phrased and misunderstood comments that seemed to imply a certain degree of satisfaction in the administration with Israel’s gestures. Although this false impression was quickly corrected by many officials, including Secretary Clinton herself, the damage was done.

The point here is that the political weakness of the Palestinian leadership, although its intentions cannot seriously be questioned, has become extremely problematic. The current position is that the United States is trying to convince the Palestinians to return to final status negotiations, but at this point does not have a settlement freeze or workable terms of reference to offer them. The situation is so precarious that the Palestinian leadership obviously feels that it cannot simply return to negotiations under these conditions, but requires some additional measures, assurances or guarantees, along with clearly defined and appropriate terms of reference, not only for strategic and diplomatic reasons, but for domestic political reasons as well. Many ideas for how to square this circle are circulating in Washington, but it does not appear that in spite of last week’s Middle East visit by Jones and Mitchell’s visit that begins today the administration has made any firm decisions on how to proceed.

This caution is commendable. It is imperative that the administration remains actively engaged in the process at the very highest levels and spares no efforts to achieve progress. However, it is also essential that all parties avoid the potential disaster of getting into high-level, formal permanent status negotiations that result in some sort of spectacular, public failure or collapse. We have seen in the past what the results of such spectacular failures can be, especially when the Palestinian political scene is particularly volatile. Now is precisely such a time. My concern about the potential fallout from a spectacularly failed high-level negotiation is much greater now than it was before the fall, precisely because the Palestinian political scene has become very highly charged and very finely balanced. The diplomatic process must continue, and continue to accelerate, but the timing and conditions for formal, high-level permanent status talks need to be carefully determined in order to assure that not only is failure manageable and not catastrophic, but that failure is also unlikely.

There are a number of safety-nets that deserve and require sustained, serious attention. First of all, it is necessary to get the structure and terms of reference of the talks right. If serious permanent status issues such as Jerusalem are off the agenda or tabled for some indefinite period and future date, to take one of the broadest and crudest examples possible, the talks will be doomed to failure from the outset. Netanyahu is demanding negotiations without preconditions, which might be workable in terms of the settlement freeze issue, but is certainly not workable when it comes to terms of reference and permanent status issues. Those are not conditions, they are necessary mutual understandings about what is being talked about and to what end in order to avoid getting into another situation in which the two sides are talking past each other and trying to raise mutually exclusive issues or keep essential matters out of the discussion. In other words, the top-down world of diplomacy is right now operating in a political context of great delicacy, and care and caution needs to taken to avoid the pitfalls created by this highly charged atmosphere.

These grave difficulties confronting the diplomatic track at the moment necessitate serious attention, support and funding for the parallel bottom-up approach that concentrates on positive changes on the ground. The PA state and institution building program announced this summer is increasingly being recognized in Washington and by the administration as an essential component in the array of necessary measures required to produce a successful peace initiative. Recent remarks by Mitchell urging international donors to support the program indicate that it is starting to become an integral part of the administration’s agenda, and not a minute too soon. The program, which would unilaterally develop Palestinian administrative, infrastructural and economic institutions with an eye to independence in the near future, provides a parallel track that is entirely supportive of the diplomatic register, and provides an alternative source of momentum towards peace that is independent of a diplomatic process which can and is now being greatly complicated by political considerations. It is nonviolent, constructive, not inimical to any of Israel’s legitimate interests or concerns, and has been rhetorically supported by almost all international actors.

Now is the time for the United States and the rest of the international community to take advantage of this crucial component of Middle East peace-building. The state and institution building agenda has been almost universally praised, but has also been far too often ignored or treated casually, and has not enjoyed the attention or support it deserves from governments, multilateral institutions, corporations, NGOs or the media. While it is essential that the Obama administration continue to pursue the top-down diplomatic agenda with as much vigor, wisdom and caution possible, it is just as important for all actors to embrace and engage with the bottom-up state and institution building plan that will complement, reinforce and protect the diplomatic track, and lay the essential components on the ground for a Palestinian state, when it is established, to be successful.