Israel has agreed to the Mideast Quartet's latest proposal to resume negotiations without any preconditions, but the Palestinians are sticking to their demands for a settlement freeze and more before Mahmoud Abbas will sit down with Benjamin Netanyahu.
Meanwhile, the Netanyahu government announced new construction of Jewish housing in Gilo, just outside the Green Line, which many considered a snub of the Quartet's call for both sides to "refrain from provocative" and unilateral actions.
Gilo may be a Jerusalem suburb, but the announcement's timing appeared "provocative," and Netanyahu should have been smart enough to figure that out without German Chancellor Angela Merkel having to call and explain it to him.
And last week an announcement of plans to build 1,600 more homes, these at Givat Hamatos, north of Bethlehem, provoked criticism from the UN Secretary-General Ban Ki-moon as "unacceptable" and "contrary" to international efforts to resume peace talks.
Netanyahu, who seems to act as though Israel has a surplus of allies and needn't worry about shedding a few, only succeeded in giving more fodder to his enemies and heartburn to his friends.
"The two sides say and do exactly what should not be said and done" if they are serious about resuming negotiations they claim they want, said Prof. Yosef Olmert of American University. Instead of offering "creative new ideas to move the stalled peace process onwards," Olmert said, Netanyahu greenlights the new Gilo housing.
Merkel made no secret that she was "furious," especially after she'd worked so hard -- at Netanyahu's request -- to help block the Palestinian's UN membership bid.
This goes to Netanyahu's credibility – never an abundant commodity. Merkel reportedly told him Gilo "creates doubts" about his "willingness" to begin serious talks" and it is his responsibility to "remove these doubts." Aides said she "does not believe a word he says."
French, British and American leaders have had similar complaints.
Secretary of State Hillary Clinton called the announcement "counterproductive," and Defense Secretary Leon Panetta warned Israel it is becoming "increasingly isolated" because it looks like it's all talk and no action when it comes to making peace.
New York Times columnist Tom Friedman called this "the most diplomatically inept and strategically incompetent government in Israel's history" and said Netanyahu's approach has put Israel "in a very dangerous situation."
But the stalemate is not all Netanyahu's fault.
Abbas rebuffed the Quartet's call for unconditional talks as he had Arab and Western urgings to go to the peace table instead of the UN. That decision has seriously damaged his relations with the Obama administration, whose help he critically needs in any peace negotiations.
The Palestinians remain deeply divided, with Fatah on the West Bank backing a two-state solution and the Islamist Hamas ruling Gaza and calling for the eradication of the Jewish state. With such divergent goals and their own inability to make salaam with each other, how can anyone expect them to make peace with Israel?
It seems like everyone except the Israelis and Palestinians want the peace process to resume, but the fundamental truth is we can't want it more than they do.
When are the United States and its Quartet partners going to figure out that the current crop of Israeli and Palestinian leaders simply are neither interested in nor capable of making peace with each other – just talking about it and pointing fingers of blame?
The Obama administration and its Quartet partners must ask themselves whether to keep pushing the unwilling Israelis and Palestinians or take a time out and adopt a policy of benign neglect that says, essentially, call us when you're ready to get serious.
That's not without risk, argue some observers, because it could leave a vacuum for the extremists and could be filled with violence.
Increasingly militant settler factions have targeted mosques, Jewish leftists and even the Israeli army. Their violence will only spread unless Netanyahu cracks down on them, but that may not sit well with their supporters in his coalition.
On the Arab side, Hamas, Islamic Jihad and Hezbollah will proclaim that the only way to get back the land they seek is by armed struggle. They will point out, with some credibility, that Israel left Lebanon and Gaza not through negotiations but by force of Arab arms. And, they ask, what has 18 years of negotiations achieved?
The peace process "has been dead for some time now" and "there's no deal now that anyone can broker," said Aaron David Miller, longtime U.S. Mideast negotiator. "The gaps are just too big, the suspicions too deep, and the regional environment too uncertain."
A time out can give the Palestinians a chance to make peace with each other and decide whether they want to create a democratic state alongside Israel or an Iranian-style Islamic republic. And it can give Israeli voters a chance to decide what they want: more settlements and more enabling of the extremists, or genuine peace negotiations.
Neither Abbas nor Netanyahu has convinced their own best friends and particularly each other that they are ready, willing and able to make peace. They waste no opportunity to talk ABOUT peace but can't seem to find the time to actually talk to each other. It's like blowing in the wind.
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