International Crisis Group, Middle East Report #122, executive summary: Does anybody still believe in the Middle East Peace Process? Nineteen years after Oslo and thirteen years after a final settlement was supposed to be reached, prospects for a two-state solution are as dim as ever. The international community mechanically goes through the motions, with as little energy as conviction. The parties most directly concerned, the Israeli and Palestinian people, appear long ago to have lost hope. Substantive gaps are wide, and it has become a challenge to get the sides in the same room. The bad news is the U.S. presidential campaign, Arab Spring, Israel’s focus on Iran and European financial woes portend a peacemaking hiatus. The good news is such a hiatus is badly needed. The expected diplomatic lull is a chance to reconsider basic pillars of the process – not to discard the two-state solution, for no other option can possibly attract mutual assent; nor to give up on negotiations, for no outcome will be imposed from outside. But to incorporate new issues and constituencies; rethink Palestinian strategy to alter the balance of power; and put in place a more effective international architecture.

For all the scepticism surrounding the ways of the past, breaking with them will not come easily. Few may still believe in the peace process, but many still see significant utility in it. Ongoing negotiations help Washington manage its relations with the Arab world and to compensate for close ties to Israel with ostensible efforts to meet Palestinian aspirations. Europeans have found a role, bankrolling the Palestinian Authority and, via the Quartet, earning a seat at one of the most prestigious diplomatic tables – a satisfaction they share with Russia and the UN Secretary-General. Peace talks are highly useful to Israel for deflecting international criticism and pressure.

Palestinians suffer most from the status quo, yet even they stand to lose if the comatose process finally were pronounced dead. The Palestinian Authority (PA) might collapse and with it the economic and political benefits it generates as well as the assistance it attracts. For the Palestinian elite, the peace process has meant relative comfort in the West Bank as well as constant, high-level diplomatic attention. Without negotiations, Fatah would lose much of what has come to be seen as its raison d’être and would be even more exposed to Hamas’s criticism.

But the reason most often cited for maintaining the existing peace process is the conviction that halting it risks creating a vacuum that would be filled with despair and chaos. The end result is that the peace process, for all its acknowledged shortcomings, over time has become a collective addiction that serves all manner of needs, reaching an agreement no longer being the main one. And so the illusion continues, for that largely is what it is.

More than any others, Palestinians have become aware of this trap, so have been the first to tinker with different approaches. But tinker is the appropriate term: their leadership, in its quest to reshuffle the deck, has flitted from one idea to another and pursued tracks simultaneously without fully thinking through the alternatives or committing to a single one. For a time, it seemed that President Mah­moud Abbas’s September 2011 speech at the UN General Assembly – resolute and assertive – might presage a momentous shift in strategy. But after the Security Council buried Palestine’s application for UN membership in committee, the logical follow-up – an effort to gain support for statehood at the General Assembly – was ignored. After admittance to one UN agency, the leadership froze further efforts. After refusing negotiations unless Israel froze settlements and without clear terms of reference, Abbas consented to talks. After threatening to dissolve the PA, central figures waved off the idea and declared the PA a strategic asset. After reaching a reconciliation agreement with Hamas, the two parties reverted to bickering.

One can fault the Palestinian leadership for lack of vision, yet there is good reason for its irresoluteness. Whatever it chooses to do would carry a potentially heavy price and at best uncertain gain. Negotiations are viewed by a majority of Palestinians as a fool’s errand, so a decision to resume without fulfilment of Abbas’s demands (settlement freeze and agreed terms of reference) could be costly for his movement’s future. His hesitation is all the stronger now that he has persuaded himself that Prime Minister Netanyahu’s positions are incompatible with a two-state solution. A decisive Palestinian move at the UN (whether at the General Assembly or in seeking agency membership) likely would prompt a cut-off in U.S. aid and suspension of tax clearance revenue transfers by Israel. A joint government with Hamas could trigger similar consequences without assurance that elections could be held or territorial unity between the West Bank and Gaza restored. Getting rid of the PA could backfire badly, leaving many public employees and their families penniless while also leading to painful Israeli counter-measures.

The trouble with all these domestic and international justifications for not rocking the boat is that they are less and less convincing and that perpetuating the status quo is not cost-free. A process that is turning in circles undermines the credibility of all its advocates. It cannot effectively shelter the U.S. from criticism or Israel from condemnation. Europe can fund a PA whose expiration date has passed only for so long. The Palestinian leadership is facing ever sharpening questioning of its approach. Most of all, the idea that to end the existing process would create a dangerous vacuum wildly exaggerates the process’s remaining credibility and thus assumes it still serves as a substitute for a vacuum – when in reality it widely is considered vacuous itself.

Finding an alternative approach is no mean feat. Contrary to what some say, or hope, it is not a one-state solution – which is championed, in very different versions, by elements of both the Israeli and Palestinian political spectrums. A one-state reality already is in place, but as a solution it almost certainly would face insurmountable challenges – beginning with the fact that it is fiercely opposed by a vast majority of Jewish Israelis, who view it as antithetical to their basic aspiration. By the same token, even though alternatives to the current process should be pursued, a solution ultimately will be found only through negotiations.

What should be explored is a novel approach to a negotiated two-state solution that seeks to heighten incentives for reaching a deal and disincentives for sticking with the status quo, while offering a different type of third-party mediation. In this spirit, four traditionally neglected areas ought to be addressed:

New issues. At the core of the Oslo process was the notion that a peace agreement would need to deal with issues emanating from the 1967 War – the occupation of the West Bank and Gaza – as opposed to those that arose in 1948 from the establishment of Israel, the trauma of the accompanying war and the displacement of the vast majority of Palestinians. But if that logic was ever persuasive, it no longer is. On one side, the character of the State of Israel; recognition of Jewish history; regional security concerns extending beyond the Jordan River; and the connection with the entire Land of Israel have been pushed to the fore. On the other, the issue of the right of return and the Nakba (the “catastrophe” that befell Palestinians in 1948); the place of the Arab minority in Israel; and, more broadly, the Palestinian connection to Historic Palestine have become more prominent. Within Jewish and Muslim communities alike, religion has become more prevalent in political discussions, and its influence on peacemaking looms larger than before.

As difficult as it is to imagine a solution that addresses these issues, it is harder still to imagine one that does not. If the two sides are to be induced to reach agreement, such matters almost certainly need to be tackled. Israelis and Palestinians, rather than refusing to deal with the others’ core concerns, both might use them as a springboard to address their own.

New constituencies. The process for most of the past two decades has been led by a relatively narrow array of actors. But the interests of those who have been excluded resonate deeply with their respective mainstreams. In Israel, this includes the Right, both religious and national, as well as settlers. Among Palestinians, it includes Islamists, Palestinian citizens of Israel and the diaspora. That needs to be rectified. A proposed deal that is attractive to new constituencies would minimise opposition and could attract support from unexpected quarters.

New Palestinian strategy. The Palestinian leadership has tested various waters but is apprehensive about taking the plunge. That approach appears less sustainable by the day, eroding the leadership’s credibility and international patience. Rather than ad-hoc, shifting tactical moves, the entire Palestinian national movement needs to think seriously through its various options – including reconciliation, internationalisation, popular resistance and fate of the PA – and decide whether it is prepared to pay the costs for pursuing them fully. If the answer is “no”, then it would be better to stop the loose talk that has been surrounding them of late.

New international architecture. Palestinian recourse to the UN is a symptom, at base, of international failure to lead and provide effective mediation. The body responsible for doing so, the Quartet, has delivered precious little since its 2002 inception; by creating an international forum whose survival depends on perpetuation of the process and whose mode of operation entails silencing individual voices in favour of a mushy, lowest-common-denominator consensus, it arguably has done more harm than good. Whether the body should be entirely disbanded or restructured – and if so, how – is a question with which the international community needs to grapple. Whatever the form, it ought to address the profound changes taking place in the Middle East, the opportunities they present and the risks they pose.

The inescapable truth, almost two decades into the peace process, is that all actors are now engaged in a game of make-believe: that a resumption of talks in the current context can lead to success; that an agreement can be reached within a short timeframe; that the Quartet is an effective mediator; that the Palestinian leadership is serious about reconciliation, or the UN, or popular resistance, or disbanding the PA. This is not to say that the process itself has run its course. Continued meetings and even partial agreements – invariably welcomed as breakthroughs – are possible precisely because so many have an interest in its perpetuation. But it will not bring about a durable and lasting peace. The first step in breaking what has become an injurious addiction to a futile process is to recognise that it is so – to acknowledge, at long last, that the emperor has no clothes.

Read the complete report, The Emperor Has No Clothes: Palestinians and the End of the Peace Process [PDF].