The good news is that the Obama administration has withdrawn its humiliating attempt to bribe Israel into accepting a 90-day extension of the (partial) settlement freeze. Not only was this negotiating ploy one of the more degrading moments in the annals of U.S. diplomacy, it also had scant chance of success. To their credit, Obama's Middle East teams finally figured this out -- a few weeks later than most observers -- and pulled the plug on the deal.
The bad news, however, is that it's not clear what their next move is. Everyone now realizes that the United States cannot play the role of a fair-minded mediator in this conflict, and the early hopes that Obama would adopt a smarter approach have been repeatedly dashed.
This situation isn't good for anyone -- not the United States, not Israel, and not the Palestinians. It is increasingly likely that a genuine two-state solution isn't going to be reached, and as I've noted before, the United States will be in a very awkward position once mainstream writers and politicians begin to recognize that fact. Once it becomes clear that "two states for two people" just ain't gonna happen, the United States will have to choose between backing a one-state, binational democracy, embracing ethnic cleansing, or supporting permanent apartheid. Those are the only alternatives to a two-state solution, and no future president will relish having to choose between them. But once the two-state solution is off the table, that is precisely the choice a future President would face.
This failure will further complicate our efforts elsewhere in the region. As former President Bill Clinton remarked a few weeks ago, solving the Israel-Palestine problem "will take about half the impetus in the whole world -- not just the region, the whole world -- for terror away. . . It would have more impact by far than anything else that could be done." It is also clear from the recent WikiLeaks releases that our Arab partners want the United States to do something about Iran, but they remain deeply concerned by the Palestinian issue and they recognize that progress on Israel-Palestine would go a long way to reducing Iran's regional influence.
Unfortunately, there's little reason to expect any sort of breakthrough, which means that local forces and dynamics are going to be exerting greater weight. When others believe that the United States is in charge of the "peace process" and leading it in a positive direction, they sit back and let Uncle Sam do the work. But now that Obama's team has failed, local actors will take matters into their own hands and U.S. influence is likely to diminish further. Why wait for Washington to deliver a deal when it is obvious that it can't?
The silver lining, if there is one, is that the events of the past two years have done a lot to clarify both where we are and where we are headed. One can take no joy from that, because the current path is bound to produce more needless suffering in the short to medium term, and maybe beyond. But dispelling the myths and illusions that have obscured our vision is of some value, and in this case, one didn't even need WikiLeaks to figure out what's going on.
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Stephen M. Walt is the Robert and Renée Belfer professor of international relations at Harvard University.