What this piece (which I think is a must read for anyone interested in the Israel/Palestine dilemma), as well as the Al Jazeera leaks from last month demonstrate is that that despite all the overblown public rhetoric, there's reasonable evidence that there are people on both sides that are willing to make a deal here. Mahmoud Abbas has demonstrated in the past that he's willing to make pretty significant concessions, especially in regards to the Jerusalem question. The proposed solutions that they were working with in the 2006 negotiations, such as a council of global trustees helping oversee the religious monuments in Jerusalem, are certainly a little wacky, but what it also demonstrates is that a little creative thinking can go a long ways in these negotiations.
Now, Benjamin Netanyahu seems to be less interested as the days go by to try to do expend the necessary political capital to get a deal done, especially with Avigdor Lieberman breathing down his neck. But despite all the doomsday scenarios being played out in the media regarding the Muslim Brotherhood, Hamas, and the changing Egypt equation as being disastrous to the Palestine/Israel question, the changes sweeping through the Middle East could very well make it even more sensible to move towards a peace agreement. Shimon Peres, Israel's president, said, "The dramatic events of the recent period make it necessary for us to take Israeli-Palestinian conflict off the regional agenda. We must do this as soon as possible because the conflict is being exploited to the detriment of all sides."
That's not to say that there aren't some huge challenges ahead in coming to an agreement. In particular, I think a real weakness of this Times piece is that it more or less glosses over the Hamas problem by arguing that they have said they will accept a peace agreement as long as it is submitted to a national referendum. What that referendum looks like, and how much hell Hamas tries to raise in trying to turn public opinion against Abbas and Fatah, is a question that is a little difficult to answer.
The Obama Administration's decision to confront Israel over settlement expansion last year appears in hindsight to have been a tactical error, as it soured relations between Obama and Netanyahu without making any significant progress in the peace process. For any progress to be made, Obama has to find a way to win Netanyahu and Israel's trust again (not to mention AIPAC's). But if Obama is looking for the sort of transformational accomplishment that makes or breaks presidential legacies, this is a real opportunity for him. Get the Israelis and Palestineans in the room again and push hard for an agreement with the Olmert/Abbas negotiations as a starting point. It won't be easy. It's probably not even likely that a lasting agreement can be made. But it would be be far more damaging in the long run not to at least try.