A unique opportunity for peace now exists -- if only Israel would stop settlements. No one in the Mideast believes the former contention. Virtually the entire world believes the latter. Both are false. The sides are as far apart as ever. Netanyahu has reluctantly accepted a further settlement freeze, a two-state-solution, spoken of painful concessions and shifted his rhetoric from settlements and Palestinian statehood, to security and recognition of Israel as the nation state of the Jewish people. One can see in this the telltale signs of a premier on the verge of major policy change, similar to Sharon before the Gaza disengagement, or simply diplomatic palaver to deflect pressure. Let's assume Netanyahu is sincere. A freeze was in place for 10 months and no progress was achieved. Indeed, the Palestinians only showed signs of interest in renewed talks when it was about to expire. Is there any reason to believe that they will not once again squander the time gained and then press for further concessions? Let's assume Abu Mazen is sincere and wishes to proceed. Whom does he speak for? His term of office expired long ago and the Palestinian Authority (PA), rapidly losing legitimacy, may be replaced by Hamas. Moreover, its ability to conclude a deal with Israel and actually implement it, is questionable at best -- and this is in the West Bank where it is ostensibly in control. Gaza, under Hamas, has become a de-facto Palestinian state. In power for nearly five years, despite repeated attempts to bring Hamas back into the fold, there is simply no prospect of a reunited Palestinian entity for many years to come. Consequently, some advocate a deal solely on the West Bank, or one which would formally include Gaza too, but only be implemented there following future reunification. Given the Palestinian national movement's emphasis on unity, it is unlikely that the PA could make a separate deal, though the graduated option may prove realistic. Israel's preeminent demand has been for an "end to conflict", i.e. to be able to live in security, without further demands, once an agreement has been reached. Hamas, however, will do everything it can to derail an agreement, including attacks on Israel and attempts to delegitimize and topple the PA. We know what will happen: the Arabs and international community will demand that Israel make further concessions, as will Hamas, as the price for its acquiescence, or future reunification with the PA. If Gaza is not part of the agreement, the conflict will not end. Obama ambitiously seeks an agreement within a year, although nearly two years of efforts failed to even get talks going. To this end, talks would initially focus on the supposedly easier issue of territory which, if resolved, would inherently resolve the settlement issue. In reality, territory is one of the difficult issues. Under the 2000 "Clinton parameters", Arafat rejected an offer of 98-99% of the West Bank. In 2007 Abu Mazen, the purported pragmatist, rejected Olmert's offer of 100% (including a 3.5% land swap). Did these dramatic rejections reflect a fundamental refusal to accept anything less than 100% of Palestinian territorial claims, or the fact that their demands on other issues, such as Jerusalem and refugees, had not been fully satisfied. Is there reason to believe that anything has changed? For Israel, territory, with its ramifications for Palestinian independence and settlements, is a vital negotiating card. Once Israel agrees to the borders of Palestine, it will no longer have leverage regarding Jerusalem and the refugees, the ultimate issues. Israel should certainly agree to the additional 60-day suspension Obama requested and for reasons of its own future, cease most construction outside of the settlement blocs it will retain. It should not, however, fully cede this concession, certainly not formally, except as part of a comprehensive final agreement. Rightly or not, the US is perceived in the Arab world today as weak, preoccupied with its domestic problems, lacking in the determination and resources necessary to address the major issues facing the region, such as Iran and Iraq, let alone the intractable peace process. Major progress is unlikely as long as this perception persists. Rather than an imminent two-state-solution, the reality is that a de-facto three-state solution is evolving (Israel, West Bank and Gaza). The ongoing focus on settlements obscures the truth, that until the PA becomes a functioning, united entity, a final breakthrough is not feasible.