After seven days of conversations with representatives of different sectors in Israel and the Palestinian occupied territories, it is clear that the stakes as high as they have ever been. The situation is difficult: peace in the middle east is as elusive as ever, the credibility of Barack Obama's administration remains in the balance, the possibility of the European Union acting decisively - rather than as merely a humanitarian financier - is receding, and the dispute between Israel and the United States in March 2010 over further settlement-building in east Jerusalem has so far resulted in no shift in the Binyamin Netanyahu government's stance.

If there is no agreement between now and 2011-12 on the realistic possibility of establishing a Palestinian state alongside Israel, the result could be the eruption of further violent protests across the middle east. The killing of Israeli soldiers in clashes with Hamas militants on 26 March 2010 - near the town of Khan Younis in the southern Gaza strip - illustrates the dangers of the current period. The likelihood of greater violence is increased by the actions of settlers who are taking over more and more Palestinian properties in east Jerusalem, and by the Israeli government’s recent designation of Islamic holy sites in the city as Jewish heritage sites (see "International Storm around Building East Jerusalem and Violent Confrontations", Ir-Amin, March 2010).

A detailed framework in which the states of Israel and Palestine could coexist alongside each other within this territory has existed for decades: defined by United Nations resolutions and agreed in negotiations. The framework is embodied, for example, in the partition proposed by the British Mandate; the post‐war negotiations in 1948 and 1967; and the plan offered at Camp David in 2000 (the “Clinton parameters”).
 
Everyone knows what needs to be done. They know where the border should be drawn, which lands must be exchanged, which Jewish settlements must be abandoned, what kind of reassurances the Palestinian and Israeli governments should give each other, and when other Arab countries should recognise the state of Israel. There have even been discussions about the range of interventions from the international community that might be necessary: essential political, military and financial diplomacy of the United States and the European Union; an international force to provide security during the transition stage; a diplomatic role for the Arab League (as envisaged in the Saudi Arabian peace initiative of 2002-03). 
 
An unequal struggle

The components of the current blockage include domestic political conditions in Israel - among them a governing coalition of the Israeli right and the extreme-right which shows no desire to negotiate, despite pressure from the United States that has escalated with the row of March 2010 over the building of 1,600 more housing-units in east Jerusalem (see "A dangerous government", Ha'aretz editorial, 26 March 2010).

The Israeli prime minister Binyamin Netanyahu, who has at the time of writing refused to accommodate any of Washington’s demands to act positively in the direction of genuine talks with the Palestinians, is trapped by his own hardline rhetoric. If he agrees to negotiate with the Palestinian Authority, he runs the serious risk that his coalition will collapse; if he changes allies and brings in the moderate rightwing Kadima party, he may not have the political clout to survive the negotiations.
 
Israel's politics have fragmented on both the right and the left. A tug-of-war between religious Jews, secularists, Zionist fanatics and Orthodox Jews has been waged, and conservative parties have become increasingly radical. Israeli analysts have remarked on the narrowing of the political spectrum during the 2000s, amid an overall shift from the centre to the right (see (see Colin Shindler, “Israel’s rightward shift: a history of the present”, 23 February 2009).

There are now fewer Israeli politicians, leading media commentators and scholars, and members of the public who are now open to negotiating with the Palestinians - either because they do not trust them, or because they consider that the Fatah-Hamas division means that the Palestinians do not now have a valid interlocutor. Moreover, an overwhelming majority of Israelis approve the 703-kilometre “separation wall” running alongside - and through - the West Bank (see Eyal Weizman, "Ariel Sharon and the geometry of occupation", 4 September 2007).

There are many reasons for this shift to the right. They include the suicide-bombings in the 1990s; the anti‐terrorist climate prevailing after 9/11; the insistent and alarmist argument that links Hamas to the Iranian nuclear threat; an influential current of racism and religious fundamentalism; and the fear of losing lands and properties seized from the Palestinians since 1948. The latter point is emphasised by Amira Haas of Ha’aretz newspaper: "Israeli society has become more racist and wants to preserve its privileges."
 
In this context, Barack Obama's policy of reaching out to the Muslim world and exerting a certain pressure on Israel - which has escalated in March 2010, with as yet uncertain results - has served to confirm the view of Israeli nationalists (both both secular and religious) that the country, now being failed by its strongest ally, truly has no friends abroad.

At the same time, Israeli civil-society organisations are active in opposing the continued occupation of Palestinian lands and properties, including that undertaken (with police protection) in Jerusalem neighbourhoods such as Sheikh Jarrah. Some journalists too are active in drawing attention to the way the separation wall cleaves through the Palestinians’ economic and social life, and to the hundreds of checkpoints or internal borders that fragment the territory and hamper the mobility of West Bank residents.
 
Many Israelis find ways creatively to highlight and peaceful to resist the most stringent measures of the state: architects, lawyers and human-rights organisations among them. The huge machinery of coercion that is daily mobilised to maintain the Palestinians in a condition of subjection makes this an unequal struggle. 
 
An unfinished state 

Many visitors to Israel and Palestine are surprised to find that a majority of Israelis do not consider their state to be fully constructed yet. This is why several sections of society feel justified in continuing to expand into more territory. They see the occupation of houses that have belonged to several generations of Arab families, and the appropriating of water sources, as means to consolidate the statebuilding mission begun in the 19th century (see Martin Shaw, "Israeli settlements and 'ethnic cleansing'", 26 August 2009). 
 
The evidence of the maps might suggest that Israel is a state with fixed frontiers, while the West Bank and the Gaza strip are the contested territories. In reality, the landscape is constantly changing in a two-sided way whereby Israel increases its territory and the other putative state sees its incipient foundations further undermined (see Fred Halliday, "Expecting rain: a letter from Jerusalem", 15 December 2006). 
 
The bureaucratic maze of the Israeli occupation has created a situation that looks increasingly like the apartheid system in segregationist South Africa. The Israeli government and its supporters vehemently reject this comparison, in part on the grounds that it implies the state’s delegitimisation. Yet the similarities are alarming: different classes of citizenship; encouragement and institutionalisation of racism; the seizure of properties and the denial of rights; the expropriation of natural resources (especially water); territorial security-controls and checkpoints; constraints on travel; and repressive control of Palestinians in many aspects of their lives. 
 
A question of will

The Palestine Authority’s prime minister and his team are trying push back this tide of unfreedom on the West Bank - and create the conditions for social progress. Salam Fayyad’s plan is to promote the institutional and economic development of both urban centres (such as Ramallah, Bethlehem, and Hebron) and rural areas.
 
Fayyad has made an ambitious commitment to the Palestine Authority’s main international donors:  to build the foundations of a state in 2010-12 which will replace the corrupt pillars erected by Fatah and the PA after the Oslo accords of 1993 (see Leslie Susser, "Salam Fayyad: The Palestinian with a plan for statehood", JTA, 8 March 2010). He has also promised to guarantee Israeli security with a police force trained and advised by a United States army general and the CIA, though the repressive methods used by the Palestine police against Hamas members in the West Bank means that this proposal has triggered controversy.
 
Fayyad's thinking, increasingly backed by some European governments and American experts, is stark: if, between March-April 2010 and around September 2011-March 2012, there is no tangible progress in the negotiations leading to the declaration and recognition of a viable Palestine state (with geographical contiguity and east Jerusalem as the capital), then the issue must be brought to the UN Security Council for deliberation. It would be important in that event to present the UN with a concrete plan to prevent any further negotiations from being trapped by further blocking and backtracking. The question then becomes: would the United States and the European Union then take such a decisive step?
 
Some European Union officials argue that, although Europe may be able to generate the right “atmosphere” and support the process of “institutionalising” the evolving Palestine, it is Palestinians alone who must create their state. Many Palestinians have rather different expectations, and distrust this line of argument. They want Europe to press Israel further and to take an active role alongside the United States by engaging in the difficult diplomacy required to make progress. At present, and regrettably, internal divisions within the EU make it unlikely that a consensus on this point will be reached.  
 
Khalil Shikaki, director of the Palestinian Centre for Policy and Survey Research (PCPSR), told me: "Palestinians have little trust in the peace process or in Israel allowing a Palestine state to come into being". They manifest similar scepticism towards the United States, the European Union and the United Nations. Most Palestinians consider that the United States could if they wanted put pressure on Israel, but doubt that Washington will follow through even in moments where it does voice particular criticisms of its ally.

Shikaki closely monitors Palestinian public opinion. He asks: "How can the creation of a living Palestine state proceed if nothing changes on the Israeli side, and at the same time we stand back and watch the Israelis increasingly taking control over east Jerusalem?" Another serious problem is that the United States has been using its influence to oblige the Palestine Authority to enter into dialogue with Israel under American mediation - but on condition that east Jerusalem is kept off the agenda. But for the Palestinians, it is a core principle that east Jerusalem should be the future capital of the Palestine state. 
 
The Americans are at least aware of the importance of east Jerusalem. On 15 March 2010, secretary of state Hillary Clinton demanded that Israel reverse its decision to build new Jewish houses in east Jerusalem. Netanyahu’s response came in his speech on 22 March at the American Israel Public Affairs Committee (Aipac) convention in Washington, when he said: “Jerusalem is not a settlement. It's our capital.”

The “quartet” (US, Russia, European Union and United Nations) has also been vocal in expressing concern about east Jerusalem and Israel’s settlement policy more generally. In the wake of the evolving dispute between Israel and the United States following Joe Biden’s visit, representatives of the quartet - including UN secretary-general Ban Ki-moon met in Moscow on 18 March 2010 in an effort to refocus diplomatic attention on the core middle-east conflict (see David Gardner, Last Chance: The Middle East in the Balance [IB Tauris, 2009]) .

The European Union’s new high representative for foreign affairs, Catherine Ashton, was emphatic about the “urgency” of this moment and the need for “results and genuine commitment...a process that leads to outcomes”. She criticised the blockade of Gaza, the decision to define cultural and religious sites based in occupied Palestinian territory as Israeli, and the announcement of the new housing-units in east Jerusalem.

At the same time, the EU does not give any any indication that it will take substantial political or economic measures against Israel if Binyamin Netanyahu continues the colonisation policy and refuses to meet Europe’s concerns.

The key: Jerusalem

Daniel Seidemann, director of Terrestrial Jerusalem, told me that east Jerusalem has consistently been left "for later" in all the rounds of negotiations since the Madrid conference of 1991. He concludes that this has been a mistake, since it has served as a pretext for the settlers and the Israeli government to reformulate the social geography of the zone intended as the capital of a future Palestine state, a zone which would also form part of the border between the two states (see Daniel Seidemann, "Annapolis and the 'Jerusalem paradigm'", 30 October 2007).

The forced eviction of Palestinian families from their homes in Jerusalem neighbourhoods, such as Sheijh Jarrah and Ramat Shlomo, and the expansion of several settlements is not only colonising more of Jerusalem but also cutting east Jerusalem off from the West Bank. "This is not just dangerous", warns Seidemann, "it is radioactive. East Jerusalem is the key issue." Any forced settlement under the protection of the Israeli police and judges could have serious repercussions in the middle east and foment extreme violence.

An editorial in the Financial Times confirms Seidemann’s view. “In January, a team answering to General David Petraeus, gave a briefing to Admiral Mike Mullen, chairman of the joint chiefs-of-staff. They explained that Israel’s intransigence threatened US standing in the middle east, putting soldiers at risk” (see “Obama must be robust with Israel”, Financial Times, 17 March 2010). The deep background to this conclusion is provided by Paul Rogers in a forensic and detailed openDemocracy column (see "America and Israel: a historic choice", 18 March 2010).
 
Several people I interviewed insisted on the need for Europe to show greater commitment to east Jerusalem by being active there: for example, channelling aid and supporting Palestine organisations on the ground. This would clearly indicate to the Israeli government that they cannot colonise east Jerusalem (see Bernard Wasserstein, Divided Jerusalem: The Struggle for the Holy City (Yale University Press, 3rd edition, 2008).
 
The words “colonisation” and “occupation” were repeatedly used and stressed in conversations I had with several local experts (see Lara Friedman & Daniel Seidemann, "Jerusalem, settlements, and the 'everybody knows' fallacy", Foreign Policy, 19 March 2010). For them the negotiation framework must change; the prerequisite is a decolonisation process as the point of entry. In this context, east Jerusalem must go first and not last.  
 
A tight deadline

The provocative actions of the Israeli government - including the announcement on 9 March 2010 of a fresh housing programme in east Jerusalem that sparked Joe Biden's fury during the US vice-president's visit - raise the obvious question: what is Netanyahu planning? Answers vary. Some say his sole interest is to stay in government while others argue that his priority is not to negotiate with the Palestinians but to put an end to Iran's nuclear plans, considered to be an "existential threat" to Israel (see Paul Rogers, "Israel's shadow over Iran", 14 January 2010). Thus, he offers Palestinians "economic peace" in the hope that as Palestine develops its citizens will cease to be an internal threat to Israel, and gradually become again the cheap workforce of old. This argument suggests that the economic dynamism in Ramallah and other West Bank towns is actually reinforcing Netanyahu’s position. 
 
But the economic boom is based on state services (paid with international aid) and the construction of housing and offices (generally with funding from the Palestinian diaspora). Several Palestinian observers have pointed out that there is no manufacturing, no farming and no food production in the West Bank economy, and certainly no industry. If the Palestinian state has not been created by 2012 then donors - especially the European Union - will face the dilemma of helping the Palestinians to survive under permanent occupation in a regime as obnoxious as apartheid. "Nowadays, violence is not an option", says Shikaki. "But what will happen if the expectations Fayyad has created are not fulfilled?"
 
Some observers suggest that local actors and donors should pull together so that Fayyad’s initiative is successful. George Giacaman, director of the Palestinian organisation Muwatin, says that “statebuilding without a political solution is a dead end.” The Palestinian president, Mahmoud Abbas, maintains that the lack of geographic contiguity and the exclusion of east Jerusalem from the talks prevent him from initiating either direct or indirect talks. 
 
Against this backdrop, domestic Palestinian politics face several challenges. The prestige of politicians has been seriously tarnished in the West Bank and Fayyad has managed to win the voters' trust by presenting himself as a technocrat whose only purpose is to improve the quality of life. But it is unlikely that he can stay above politics. Once he gets involved in political manoeuvring (and this is highly probable) he will be judged by a different criterion. At the moment, he represents a nation's hope, but a failure to deliver could mean that he will come to embody its frustration.
 
Meanwhile, Hamas maintains tight control in the Gaza strip, creating - through pacts with religious sectors which have promoted Islamisation - the foundations of a state that is both firm and fragile. The results of PCPSR surveys indicate that Fatah continues to hold back from confrontation in the strip. Hamas complains that the Palestine Authority does not take it seriously. Its leaders want power-sharing, with rotation. But there are large sectors of Fatah that see Hamas as an evanescent phenomenon and hope it will lose momentum if the occupation is ended and a Palestinian state declared.
 
The harsh realities, however, are far removed from the oft‐repeated promises. This gap has led Yossi Alpher, co-editor of the website BitterLemons, to suggest that even if Netanyahu and Abbas reached an agreement, no one would respect it. He therefore believes that it is better for the international community to support negotiations on very specific issues, such as the exchange of prisoners between Hamas and Israel or opening up the Gaza strip, rather than aiming for a grand peace agreement which has so many odds stacked against it. 
 
“A time for resistance”
 
Mustafa Barghouti of Al-Mubadara (Palestinian National Initiative) thinks that Israel intends to extend any negotiations for so long that they go nowhere; meanwhile Israel can continue its policy of annexation, while allowing the establishment of enclaves where the Palestinian Authority could control security. This Palestinian doctor, like many critical Palestinians and Israelis, thinks that peaceful resistance (such as a boycott of Israeli products) is the only answer. At the same time, Barghouti  believes that the Palestinian Authority should mobilise support for international resistance; denounce Israel in public forums; promote the United Nations fact-finding mission on the Gaza conflict of 2008-09 (the Goldstone report); and request the International Criminal Court (ICC) to intervene. 
 
Barghouti says that the Palestinian Authority should persist with its plans to fight poverty, provide education, and urban security; and to promote national unity between Fatah and Hamas. Above all, this more militant view argues that the Palestinian Authority cannot allow the international community to remain passive in the face of apartheid. "This is not the time for solutions", says Barghouti, "but the time for resistance”.

But for many Palestinians - including those who fought in the first and second intifada - the onus is now on the international community to make a stronger effort to stop Israel and start negotiations. The widespread Palestinian mood is: “We paid a heavy price and in the end we are worse off than before.” There is no more time to lose.