More than 16 years after the euphoria of the Oslo accords, the Israelis and the Palestinians have still not reached a final-status peace agreement. Indeed, the last decade has been dominated by setbacks -- the second intifada, which started in September 2000; Hamas' victory in the January 2006 Palestinian legislative elections; and then its military takeover of the Gaza Strip in June 2007 -- all of which have aggravated the conflict.
A further effort to reach a comprehensive settlement is bound to falter, thus increasing the dangers of another major flare-up and undermining the credibility of the Palestinian Authority (PA). The prospects of a deal between Israeli Prime Minister Benjamin Netanyahu and PA President Mahmoud Abbas are slim, since Abbas already rejected former Israeli Prime Minister Ehud Olmert's far-reaching proposals -- the sort of offer Netanyahu would never make. This diplomatic stalemate discredits moderates and plays into the hands of extremists on both sides who refuse to make the concessions that any viable peace treaty will require.
Since an extended impasse is so dangerous, the best option for both the Israelis and the Palestinians is to seek a less ambitious agreement that transforms the situation on the ground and creates momentum for further negotiations by establishing a Palestinian state within armistice boundaries. In diplomatic terms, this formula would go beyond phase two of George W. Bush's 2002 "road map for peace," which proposed a Palestinian state with provisional boundaries, by striving to reach interim agreements on all the issues but stopping short of actually resolving the final-status issues of Jerusalem, the fate of the Palestinian refugees, and permanent boundaries, which were envisioned as phase three of Bush's road map. Such a gradual, yet comprehensive, approach would be more promising than further attempts at taking daring shortcuts. As the Oslo accords demonstrated, giant steps generally result in deadlock.
Israel urgently needs to reach such a provisional agreement before the Palestinian leadership grows even more skeptical of a two-state solution. Although Abbas and his close associates seem committed