· Palestinians see no hope of change on the ground
· Effort to isolate Hamas has backfired, says thinktank (or it went according to Israel’s plan . . .)

Peace talks between Israelis and Palestinians are stalled and are
unlikely to produce a significant agreement within the year, a growing
number of voices in the Middle East are warning.

Saab Erekat, a
senior Palestinian negotiator, admitted yesterday that his side had
failed to convince the Palestinians that the current peace process
would bring any change on the ground. At the same time, the
International Crisis Group thinktank said efforts to isolate Hamas in
Gaza were “bankrupt” and had backfired, damaging the credibility of the
Palestinian president, Mahmoud Abbas, who is leading the peace talks.

“The peace process is at a standstill,” the group said in a report.

Last
week Tony Blair, the envoy of the Quartet of Middle East peacemakers –
the EU, the UN, the US and Russia – admitted that without change on the
ground it was unlikely that the negotiations, launched four months ago
in Annapolis, Maryland, would succeed.

Erekat, a veteran
negotiator, said that 358 Palestinians had been killed and 1,200
wounded in those four months, with more than 2,000 arrested and 35
houses demolished. He said 5,378 housing units were under construction
in Jewish settlements in East Jerusalem and in the West Bank, even
though the US road map – the framework for the talks – stipulates that
Israel must freeze settlement activity.

“This is what the
Palestinians see being done and at a time when we are trying to tell
them we are going to make the year 2008 a year of peace,” Erekat said
at a press conference in East Jerusalem.

He also admitted that
the Palestinians had failed to fulfil their commitments under the road
map, which focus on halting militant activity and imposing the rule of
law. More than a dozen Israelis have died since Annapolis. “As far as
our obligations go, I am not saying we have finalised. We have a long,
long way to go,” he said.

Erekat said the parameters of a two-state peace deal had been negotiated several times in recent years.

“We
have come a long way. Now it is time for decisions. Will the leaders
deliver the decisions? I don’t know. Can they deliver the decisions?
Yes they can.”

Other senior Palestinian figures have warned that
a failure to reach a deal this year might bring the collapse of the
Palestinian Authority, which was set up with limited powers after the
Oslo accords more than a decade ago. Erekat too hinted at this: “If we
fail to produce an agreement by the end of 2008 I think we may
disappear. This is how critical the situation is in Palestinian
political life.” It is not yet clear, however, whether this is a
serious proposition or a negotiating tactic.

For now Israeli
leaders have, at least in public, sounded more upbeat. “We are
optimistic about negotiations, in spite of what you occasionally read,”
the Israeli prime minister, Ehud Olmert, said yesterday.

US
senator John McCain, the presumptive Republican presidential nominee,
met Olmert in Jerusalem yesterday and said he believed Abbas wanted a
peace agreement. The US vice-president, Dick Cheney, is due in the
Middle East this weekend to further the talks and the US secretary of
state, Condoleezza Rice, will follow him later this month.

In
private, Israeli officials have sounded sceptical about the chance of a
deal this year, saying in particular that the continued control of Gaza
by Hamas would effectively scupper any agreement.

Yesterday the
International Crisis Group said that efforts to isolate Hamas in Gaza
with an economic blockade had not only failed but had weakened the more
pragmatic faction led by Abbas.

“The gravest threat to
diplomacy comes not when Hamas has something to gain, but when it
concludes it has nothing to lose,” it said.