Abir Dandis, the mother of the two girls who were murdered in the Negev town of Al-Fura’a last week, couldn't find a police officer to listen to her warnings, neither in Arad nor in Ma’ale Adumim. Both police stations operate in areas where Israel wants to gather the Bedouin into permanent communities, against their will, in order to clear more land for Jewish communities. The dismissive treatment Dandis received shows how the Bedouin are considered simply to be lawbreakers by their very nature. But as a resident of the West Bank asking for help for her daughters, whose father was Israeli, Dandis faced the legal-bureaucratic maze created by the Oslo Accords.

The Palestinian police is not allowed to arrest Israeli civilians. It must hand suspects over to the Israel Police. The Palestinian police complain that in cases of Israelis suspected of committing crimes against Palestinian residents, the Israel Police tend not to investigate or prosecute them.

In addition, the town of Al-Azaria, where Dandis lives, is in Area B, under Palestinian civilian authority and Israeli security authority. According to the testimony of Palestinian residents, neither the IDF nor the Israel Police has any interest in internal Palestinian crime even though they have both the authority and the obligation to act in Area B.

The Palestinian police are limited in what it can do in Area B. Bringing in reinforcements or carrying weapons in emergency situations requires coordination with, and obtaining permission from, the IDF. If Dandis fears that the man who murdered her daughters is going to attack her as well, she has plenty of reason to fear that she will not receive appropriate, immediate police protection from either the Israelis or the Palestinians.

Dandis told Jack Khoury of Haaretz that the Ma’ale Adumim police referred her to the Palestinian Civil Affairs Coordination and Liaison Committee. Theoretically, this committee (which is subordinate to the Civil Affairs Ministry) is the logical place to go for such matters. Its parallel agency in Israel is the Civilian Liaison Committee (which is part of the Coordination and Liaison Administration - a part of the Civil Administration under the Coordinator of Government Activities in the Territories).

In their meetings, they are supposed to discuss matters such as settlers’ complaints about the high volume of the loudspeakers at mosques or Palestinians’ complaints about attacks by settlers. But the Palestinians see the Liaison Committee as a place to submit requests for permission to travel to Israel, and get the impression that its clerks do not have much power when faced with their Israeli counterparts. In any case, the coordination process is cumbersome and long.

The Palestinian police has a family welfare unit, and activists in Palestinian women’s organizations say that in recent years, its performance has improved. But, as stated, it has no authority over Israeli civilians and residents. Several non-governmental women’s groups also operate in the West Bank and in East Jerusalem, and women in similar situations approach them for help. The manager of one such organization told Haaretz that Dandis also fell victim to this confusing duplication of procedures and laws. Had Dandis approached her, she said, she would have referred her to Adalah, the Legal Center for Arab Minority Rights in Israel, which has expertise in navigating Israel’s laws and authorities.

John Kerry revealed his long-awaited plan for peace in the Middle East on Sunday, hinging on a $4bn (£2.6bn) investment in the Palestinian private sector.

The US secretary of state, speaking at the World Economic Forum on the Jordanian shores of the Dead Sea, told an audience including Israeli president Shimon Peres and Palestinian leader Mahmoud Abbas that an independent Palestinian economy is essential to achieving a sustainable peace.

Speaking under the conference banner "Breaking the Impasse", Kerry announced a plan that he promised would be "bigger, bolder and more ambitious" than anything since the Oslo accords, more than 20 years ago.

Tony Blair is to lead a group of private sector leaders in devising a plan to release the Palestinian economy from its dependence on international donors. The initial findings of Blair's taskforce, Kerry boasted, were "stunning", predicting a 50% increase in Palestinian GDP over three years, a cut of two-thirds in unemployment rates and almost double the Palestinian median wage. Currently, 40% of the Palestinian economy is supplied by donor aid.

Kerry assured Abbas that the economic plan was not a substitute for a political solution, which remains the US's "top priority".

Peres, who had taken the stage just minutes before, also issued a personal plea to his Palestinian counterpart to return to the negotiations.

"Let me say to my dear friend President Abbas," Peres said, "Should we really dance around the table? Lets sit together. You'll be surprised how much can be achieved in open, direct and organised meetings."

Thick locks hug the front gates of shuttered shops, now covered in graffiti and dust from lack of use. Only a handful of customers pass along the dimly lit road, sometimes stopping to check the ripeness of fruits and vegetables, or ordering meat in near-empty butcher shops.

“All the shops are closed. I’m the only one open. This used to be the best place,” said 64-year-old Mustafa Sunocret, selling vegetables out of a small storefront in the marketplace near his family’s home in the Muslim quarter of Jerusalem’s Old City.

Amidst the brightly coloured scarves, clothes and carpets, ceramic pottery and religious souvenirs filling the shops of Jerusalem’s historic Old City, Palestinian merchants are struggling to keep their businesses alive.

Faced with worsening health problems, Sunocret told IPS that he cannot work outside of the Old City, even as the cost of maintaining his shop, with high electricity, water and municipal tax bills to pay, weighs on him.

“I only have this shop,” he said. “There is no other work. I’m tired.”

Abed Ajloni, the owner of an antiques shop in the Old City, owes the Jerusalem municipality 250,000 Israeli shekels (68,300 U.S. dollars) in taxes. He told IPS that almost every day, the city’s tax collectors come into the Old City, accompanied by Israeli police and soldiers, to pressure people there to pay.

“It feels like they’re coming again to occupy the city, with the soldiers and police,” Ajloni, who has owned the same shop for 35 years, told IPS. “But where can I go? What can I do? All my life I was in this place.”

He added, “Does Jerusalem belong to us, or to someone else? Who’s responsible for Jerusalem? Who?”

Illegal annexation

Israel occupied East Jerusalem, including the Old City, in 1967. In July 1980, it passed a law stating that “Jerusalem, complete and united, is the capital of Israel”. But Israel’s annexation of East Jerusalem and subsequent application of Israeli laws over the entire city remain unrecognised by the international community.

Under international law, East Jerusalem is considered occupied territory – along with the West Bank, Gaza Strip and Syrian Golan Heights – and Palestinian residents of the city are protected under the Fourth Geneva Convention.

Jerusalem has historically been the economic, political and cultural centre of life for the entire Palestinian population. But after decades languishing under destructive Israeli policies meant to isolate the city from the rest of the Occupied Territories and a lack of municipal services and investment, East Jerusalem has slipped into a state of poverty and neglect.

“After some 45 years of occupation, Arab Jerusalemites suffer from political and cultural schizophrenia, simultaneously connected with and isolated from their two hinterlands: Ramallah and the West Bank to their east, West Jerusalem and Israel to the west,” the International Crisis Group recently wrote.

Israeli restrictions on planning and building, home demolitions, lack of investment in education and jobs, construction of an eight-foot-high separation barrier between and around Palestinian neighbourhoods and the creation of a permit system to enter Jerusalem have all contributed to the city’s isolation.

Formal Palestinian political groups have also been banned from the city, and between 2001-2009, Israel closed an estimated 26 organisations, including the former Palestinian Liberation Organisation headquarters in Jerusalem, the Orient House and the Jerusalem Chamber of Commerce.

Extreme poverty

Israel’s policies have also led to higher prices for basic goods and services and forced many Palestinian business owners to close shop and move to Ramallah or other Palestinian neighbourhoods on the other side of the wall. Many Palestinian Jerusalemites also prefer to do their shopping in the West Bank, or in West Jerusalem, where prices are lower.

While Palestinians constitute 39 percent of the city’s population today, almost 80 percent of East Jerusalem residents, including 85 percent of children, live below the poverty line.

“How could you develop [an] economy if you don’t control your resources? How could you develop [an] economy if you don’t have any control of your borders?” said Zakaria Odeh, director of the Civic Coalition for Palestinian Rights in Jerusalem, of “this kind of fragmentation, checkpoints, closure”.

“Without freedom of movement of goods and human beings, how could you develop an economy?” he asked.

“You can’t talk about independent economy in Jerusalem or the West Bank or in all of Palestine without a political solution. We don’t have a Palestinian economy; we have economic activities. That’s all we have,” Odeh told IPS.

Israel’s separation barrier alone, according to a new report by the United Nations Conference on Trade and Development (UNCTD), has caused a direct loss of over one billion dollars to Palestinians in Jerusalem, and continues to incur 200 million dollars per year in lost opportunities.

Israel’s severing and control over the Jerusalem-Jericho road – the historical trade route that connected Jerusalem to the rest of the West Bank and Middle East – has also contributed to the city’s economic downturn.

Separation of Jerusalem from West Bank

Before the First Intifada (Arabic for “uprising”) began in the late 1980s, East Jerusalem contributed approximately 14 to 15 percent of the gross domestic product (GDP) in the Occupied Palestinian territories (OPT). By 2000, that number had dropped to less than eight percent; in 2010, the East Jerusalem economy, compared to the rest of the OPT, was estimated at only seven percent.

“Economic separation resulted in the contraction in the relative size of the East Jerusalem economy, its detachment from the remaining OPT and the gradual redirection of East Jerusalem employment towards the Israeli labour market,” the U.N. report found.

Decades ago, Israel adopted a policy to maintain a so-called “demographic balance” in Jerusalem and attempt to limit Palestinian residents of the city to 26.5 percent or less of the total population.

To maintain this composition, Israel built numerous Jewish-Israeli settlements inside and in a ring around Jerusalem and changed the municipal boundaries to encompass Jewish neighbourhoods while excluding Palestinian ones.

It is now estimated that 90,000 Palestinians holding Jerusalem residency rights live on the other side of the separation barrier and must cross through Israeli checkpoints in order to reach Jerusalem for school, medical treatment, work, and other services.

“Israel is using all kinds of tools to push the Palestinians to leave; sometimes they are visible, and sometimes invisible tools,” explained Ziad al-Hammouri, director of the Jerusalem Centre for Social and Economic Rights (JCSER).

Al-Hammouri told IPS that at least 25 percent of the 1,000 Palestinian shops in the Old City were closed in recent years as a result of high municipal taxes and a lack of customers. “Taxation is an invisible tool…as dangerous as revoking ID cards and demolishing houses,” he said. “Israel will use this as pressure and as a tool in the future to confiscate these shops and properties.”

Palestinian President Mahmoud Abbas said there won't be a new Palestinian uprising as long as he's in office, but warned the current calm might end once he steps down, as early as June.

In a 60-minute interview, Mr. Abbas rebutted charges by Israel that he was responsible for holding up peace talks, saying he twice presented privately a compromise on settlements to Israeli Defense Minister Ehud Barak. Mr. Abbas said Mr. Barak ignored the offer. Mr. Barak's office didn't respond to requests for comment.

Mr. Abbas has insisted on a total freeze on settlement-building in the West Bank and East Jerusalem before any direct talks with Israeli Prime Minister Benjamin Netanyahu. Mr. Netanyahu and his coalition partners have rejected any such concession.

Mr. Abbas said he would resume direct talks if Israel implemented a full but "undeclared" building freeze for five months. In his offer -- disclosed in an interview last week with Israel's Haaretz newspaper -- Israel could do so without any controversial declaration, giving its leadership political cover, he said.

A senior official in Mr. Netanyahu's office called the offer "unrealistic," a "total nonstarter."

Mr. Abbas, smoking Marlboro Reds in a leather arm chair inside the cramped office he keeps at the Palestinian embassy in Amman, cracked jokes and exuded what he said was a newfound calm since his announcement in early November that he would not stand for re-election because of the lack of progress on peace talks.

His pledge to avoid a violent uprising comes as Palestinian frustrations mount over stalled talks and growing tensions with Jewish settlers. Many analysts and ordinary Palestinians have warned that a third intifada, or violent uprising, could be around the corner. The first two intifadas, which erupted in 1987 and in 2000, left thousands dead.

"As long as I'm in office, I will not allow anybody to start a new intifada. Never, never," Mr. Abbas said. "But if I leave, it's no longer my responsibility and I can't make any guarantees."

Israeli security officials have praised Palestinian security services in recent months, but maintain that Israel's military operations in the West Bank are equally critical to the decrease in violence.

While raising the specter of violence, Mr. Abbas pressed for the U.S. and the broader international community to act more aggressively to bring Israel back to the negotiating table. Mr. Abbas voiced frustration with the White House and called on President Barack Obama to apply more pressure on Israel to freeze settlements. He said Mr. Obama should get the peace process back on track by presenting a U.S.-drafted peace proposal to both parties.

"Now the ball is in the international community's court and in America's court," Mr. Abbas said. "They have to come and say this is the end game and pressure the Israeli government." A spokesman for the White House urged Israel and the Palestinians to resume direct negotiations as the way to achieve both sides' goals.

In the interview, Mr. Abbas said he was most proud of his commitment to peace and most regretful over his failure to conclude a final peace deal.

Mr. Abbas has been on a political rollercoaster in recent months. His fortunes were on the rise in late 2009, as West Bank security and the economy improved. But when he appeared to surrender to U.S. and Israeli demands -- by agreeing to meet with Mr. Netanyahu in New York in October, and then backing the deferral of a United Nations report alleging Israeli war crimes in the Gaza War -- his administration was plunged into crisis.

Two months ago, polls showed Mr. Abbas likely to narrowly lose to the Hamas faction in elections. Aides said he made the decision not to run then, but his poll numbers have since ticked higher.

Elections, delayed from January, are now tentatively slated for June, but could be further postponed over rifts between Mr. Abbas's Fatah party and Hamas, the Islamist militant group that controls the Gaza Strip.

Many believe Mr. Abbas's threat to stand down is political brinksmanship meant to galvanize the international community into ramping up pressure on Israel to make concessions for peace.

Write to Charles Levinson at charles.levinson@wsj.com

Marwan Barghouti, the popular imprisoned Palestinian leader, embodies the promise and the peril Israel faces as it negotiates with Hamas to trade hundreds of Palestinian prisoners for a long-held Israeli soldier.

Islamist Hamas says Mr. Barghouti tops the list of approximately 1,000 prisoners it is demanding Israel free in exchange for Sgt. Gilad Shalit, who Hamas has held captive in Gaza for more than three years.

Senior Israeli and Hamas officials said late last month the two sides were close to a final deal. But since then, Hamas officials have told Arabic media that Israel objected to a handful of prisoners on their list and insisted on deporting many freed prisoners abroad, causing a delay. Hamas officials now say they think a deal is possible by month's end.

Israeli Prime Minister Benjamin Netanyahu is under intense pressure to win Sgt. Shalit's freedom. But giving in to Hamas demands to free top Palestinian leaders and militants carries significant political and, some say, security risks.

The highest-profile name on Hamas's list, and a likely sticking point, is Mr. Barghouti, a leader of Palestine's Fatah faction. His supporters compare him with South Africa's Nelson Mandela, who at various stages in the fight against apartheid advocated peaceful coexistence and armed resistance. To his critics in Israel, he is a terrorist, serving six life sentences in prison for a 2004 conviction on five counts of murder in relation to attacks on Israelis.

"Barghouti is one of the many prisoners who, if they are included in the deal, it will hand a great victory to terror," said Israeli technology minister Daniel Herschkowitz, who, as a cabinet member, will be required to approve any prisoner release. "On the other hand, the state has an obligation to stand behind its soldiers."

Mr. Barghouti's release could have a far-reaching impact on domestic Palestinian politics and the peace process. The Fatah leader could help heal the rift between his secular party, which holds sway over the West Bank, and Hamas, which has effective control of the Gaza Strip.

Palestinian opinion polls show Mr. Barghouti is capable of handily defeating current Palestinian president Mahmoud Abbas, who represents the old guard of Fatah, and is also more popular than any likely Hamas candidate. His popularity also could provide impetus for a Palestinian-wide vote, which has been delayed in part by the rift between Hamas and Fatah.

Some Israelis and Palestinians believe the secular, Hebrew-speaking Mr. Barghouti is among the few Palestinian leaders who could effectively engage with Israel in any serious peace deal, and have the political legitimacy to sell the deal to Palestinians. From his jail cell, Mr. Barghouti helped broker a cease-fire with Israel in 2003 and spearheaded an effort to reconcile the warring Fatah and Hamas factions in 2006.

Mr. Barghouti touches a raw nerve in Israel, however. Though he supports a negotiated two-state solution, he continues to advocate the right of Palestinians to resist Israel's occupation, by force if necessary. He condemns targeting civilians inside Israel proper, a position that implicitly supports attacks on Jewish settlers and soldiers in the West Bank.

The 46-year-old Mr. Barghouti was born in the West Bank and emerged as a young activist leader in Yasser Arafat's Fatah in the late 1970s and 1980s. He became fluent in Hebrew during four years in Israeli prison beginning in the late 1970s and was exiled abroad for his role in the first Palestinian intifada, or uprising, in 1987. In 1994, he returned to the West Bank after the signing of the Oslo Peace Accords and was elected to the Palestinian parliament.

During the latter half of the 1990s, he worked closely with Israelis. "He was an educator and very cooperative partner working with us to build a new reality between the young people of both societies," recalls Janet Aviad, an Israeli peace activist.

But Mr. Barghouti also represents many Israelis' sense of betrayal and disillusionment after peace efforts in 2000 failed, and Palestinians turned to violence in what became known as the second intifada.

Mr. Barghouti emerged as the uprising's most visible leader. He urged Palestinians to take up arms and led protests and marches that often ended in clashes with Israeli forces.

In 2002, Israel arrested Mr. Barghouti and charged him with 26 counts of murder, convicting him on five counts two years later. He has denied the Israeli accusations.

President Bush wrapped up his five-day Mideast tour Sunday with little visible progress on either of the main issues he highlighted: rising oil prices and the Israeli-Palestinian peace process.

Instead, Bush was subjected to a wave of criticism as he delivered a lecture to the Arab world on the benefits of democracy.

"This trip was an exclamation point on the fact that the mystique about American power is no longer there," said Steve Clemons, an analyst at the New America Foundation, a think tank in Washington.

On the final leg of his trip, Bush came to the Red Sea resort town of Sharm el-Sheik, where Egypt's President Hosni Mubarak greeted him with a half-dozen soldiers and none of the pomp given Bush on other state visits. Instead, Egypt's state-controlled newspapers slammed the American president in stinging front-page editorials.

"It was clear that America is neither loved nor feared," said Hisham Qassem, a prominent Egyptian newspaper editor and democracy activist who won the National Endowment for Democracy's annual democracy award last fall and visited with Bush in the Oval Office.

"America is deeply concerned about the plight of political prisoners in this region, as well as democratic activists who are intimidated or repressed, newspapers and civil society organizations that are shut down and dissidents whose voices are stifled," Bush said in his speech in Sharm el-Sheik.

The critical tone contrasted with a congratulatory speech he delivered to the Israeli parliament on Thursday.

Palestinian President Mahmoud Abbas had dinner with Bush Saturday night, then said Sunday he was "angered" by Bush's speech to the Israeli Knesset because it did not touch enough on Palestinian hopes for statehood.

National security adviser Stephen Hadley assured reporters that there was "tangible progress" in peace negotiations. He declined to be more specific.

Abbas' comments Sunday suggested a deep satisfaction with Washington's role in the peace process, however.

"We do not want the Americans to negotiate on our behalf," Abbas said. Meanwhile, Lebanon's Prime Minister Fuad Saniora canceled a face-to-face meeting with Bush in Egypt to meet instead with leaders from Hezbollah, the Iranian-backed militant group that has destabilized Lebanon in recent weeks.

Saniora came to power after hundreds of thousands of Lebanese, inspired in part by Bush's first-term vow to get tough on Mideast dictators, poured into Beirut's streets in 2004 demanding an end to Syria's occupation.

But as Saniora left for his meeting with Hezbollah on Saturday, he criticized Bush for not doing enough to support Lebanon and called on him "to pressure the Israelis to end their occupation."

"Our Arab allies feel they've overinvested in us and we haven't delivered, so now these states are putting distance between themselves and the U.S," Clemons said.

Washington's reputation in the region also has been damaged by its inability to lay out an effective strategy to deal with Iran, said Meyrav Wurmser, director of the Middle East program at the Hudson Institute, a conservative think tank in Washington.

America's traditional Sunni Arab allies such as Egypt and Saudi Arabia have expressed deep concern over the rise of Iran, which is Shiite-dominated. "The image of weakness, which I think America is giving, is because that despite all the tough talk we're not confronting Iran," she said.

In his speeches during the trip, Bush described a Middle East that included a free and democratic Palestinian state, that was free of Islamist extremist groups like Hezbollah, al-Qaeda and Hamas, and where Arabs across the region lived in free societies.

When Bush first launched his Mideast democratization push in the wake of 9/11, he thought he could achieve those goals by the end of his second term, Wurmser said.

On Sunday, Bush described the goals as predictions for the year 2068.

"Sixty years! Is he kidding?" Qassem said. "I had hoped to see some movement in my lifetime."

"I think those speeches showed that he realizes this is … harder to do than he thought," Wurmser said. "It's not so easy to give these people democracy."

President Bush is due in the Middle East on Wednesday to try to rekindle hope for a lasting peace, but first he'll have to win over skeptics such as Ghazi Bustami.

"For seven years, Bush served Israel and made war," says Bustami, 31, the portly, soft-spoken Palestinian owner of a TV repair shop in this West Bank city. "Now with a few months left in his presidency he thinks of the Palestinians. But it's too late."

People on both sides of the Israeli-Palestinian divide doubt whether a president best known for the Iraq war has the credibility to help deliver perhaps the world's most elusive peace deal. There is some optimism in places such as Nablus — where improved security has bolstered hopes for a Palestinian state — but disagreements endure on other key obstacles to peace, and even Bush's advisers are playing down expectations for a breakthrough deal anytime soon.

Instead, Bush's first trip as president to Israel and the Palestinian territories seeks to improve relations with the Arab world and show he is committed to a long-term solution for a conflict that remains a major rallying cry for Islamic extremists. The trip also raises a more enduring question: whether the United States can still be an effective peace broker despite events that have deteriorated its popularity in the region, such as the Iraq war and the Abu Ghraib prison scandal that involved the mistreatment of Iraqi captives.

"I'm afraid Bush's trip is just a photo op," says Yonatan Touval, a foreign policy adviser in Israel's dovish, left-wing Meretz Party, who is skeptical that Bush will "actually put himself on the line and put his weight behind" negotiations.

Bush has refrained from trying to broker a major Middle East peace agreement so far in his presidency, and national security adviser Stephen Hadley concedes that Bush is "not looking for headline announcements" during this trip.

It is unlikely that Bush will even get Israeli and Palestinian leaders to sit down at the same table, Hadley says, much less broach thorny issues such as where the borders will be drawn for a Palestinian state.

However, Hadley says, the timing is right for a visit. Moderate, compromising leaders are now in charge on both sides, and there is crucial backing from Arab states such as Egypt and Saudi Arabia, which attended a modestly successful peace conference Bush organized in Annapolis, Md., six weeks ago.

A visit by a U.S. president still has a unique ability to prod the leaders toward a long-term deal, Hadley says.

"Just his going there is going to advance the prospects," Hadley says.

West Bank breakthroughs

In the short term, the main hurdles to peace are Israeli housing settlements in the West Bank and attacks on Israel by Palestinian militants. If there is any sign of progress on the latter, the calm streets of Nablus could be Exhibit A.

Until a few months ago, the city of 135,000 was the Wild West of the West Bank, its streets ruled by armed militants loyal to various Palestinian militant groups such as Hamas. Today, the rattle of machine guns has been replaced with the shouts of vendors hawking their wares in the city's ancient souk. The thugs who once held sway largely have been replaced with freshly trained Palestinian police recruits in crisp uniforms.

Palestinian President Mahmoud Abbas hopes the turnaround can demonstrate to Israel and the world that his people can handle their own security, one of the biggest hurdles to Bush's long-stated goal of making a Palestinian state a reality.

Israeli troops still conduct occasional sweeps of their own to round up militants, such as a four-day operation in Nablus that ended Sunday, but Palestinian police say they have the situation in hand.

"Hamas is totally under our control," says Ahmed Sharqawi, Nablus' newly appointed, chain-smoking police chief. He said police have confiscated up to 80% of Hamas' weapons and "decimated their military capabilities in the West Bank."

The improvement in the West Bank follows a year that, nationwide, saw violence between Israelis and Palestinians fall to the lowest levels since 2000. Violence rose then after President Clinton failed in a late-term push for peace similar in some ways to Bush's.

In another possible breakthrough, Israeli Prime Minister Ehud Olmert admitted last week that Israel's continued construction of housing settlements in the West Bank was a violation of the "road map" for peace that the Bush administration outlined in 2003.

Some of the new settlements are forbidden by Israeli law, including an outpost erected near the Palestinian village of Billin on Wednesday.

The issue infuriates Palestinians who see any new construction as a sign that Israel will never cede them the territory they want for a state.

Whether Bush can turn Olmert's words into concrete action on the settlements issue will be crucial to how his trip is perceived in the Arab world, says Bruce Riedel, a senior fellow at the Brookings Institution.

Olmert's predecessor, Ariel Sharon, promised Bush he would uproot at least 20 illegal settlements but never followed through.

Bush's "sales job … is going to be very hard to pull off as long as there is new construction going on," Riedel says.

Dependence key to U.S. position

Many members of Olmert's coalition see the settlements as a bargaining chip to persuade the Palestinians to rein in militants in their ranks, and secure other concessions in later negotiations.

"The government will immediately fall" if Olmert tries to evacuate settlements without first getting concessions from the Palestinians, says Tzahi Hanegbi, the head of parliament's foreign affairs committee and a close Olmert ally.

Traditionally, U.S. presidents have had the ability to pressure Israeli leaders to compromise on such issues because of Israel's dependence on the United States for economic and military aid, says Gidi Grinstein, director of the Reut Institute, a think tank based in Tel Aviv.

"American pressure is the single most important factor for keeping coalitions together here," he says.

The last major breakthrough in the peace process, the 1993 Oslo Accords, was partly a consequence of a decision two years earlier by then-president George H.W. Bush, says David Landau, the editor of Israel's Haaretz newspaper. The elder Bush suspended some aid to Israel until it froze settlement expansion, an unprecedented step that led to the fall of the government and the election of Nobel Prize-winning peacemaker Yitzhak Rabin, Landau says.

Today, Israelis still rely on U.S. pressure to broker deals, a point Landau made in crude fashion in September when he told visiting Secretary of State Condoleezza Rice that "Israel wants to be raped by the U.S."

The comment, while crass, struck a nerve in Israel and has been repeated widely in political circles in the days prior to Bush's visit.

However, Bush's low popularity at home and around the world may leave him unable to deliver compromises on the most difficult issues, says Aaron David Miller, a former Middle East negotiator for six secretaries of State dating back to the Reagan administration.

"Right now, we are perceived to be weak," he says.

Olmert believes a deal is crucial

Without U.S. pressure, the inertia from decades of conflict may prevail.

Israelis' recent experience with withdrawal from occupied Arab lands has been largely negative. Ever since Israel pulled its army and settlers out of Gaza, militants have waged a relentless rocket campaign against nearby Jewish communities.

Israelis fear that loosening their military grip on the West Bank by removing troops, settlers and more than 500 checkpoints and roadblocks would lead to a new wave of attacks by Arab militants.

"If you take away the roadblocks, you leave us completely without any defense, and you think the cat is not going to come and gobble us up?" says Rachel Klein, the spokeswoman for Kiryat Arba, one of the oldest Jewish settlements in the West Bank.

Many Palestinians remain convinced that the Americans' interest in the conflict is one-sided.

"Things just get worse and worse," says Hossam Kataloni, an Islamic cleric-turned-Nablus city councilman from Hamas' Change and Reform Party. "The Americans will continue to give the Israelis unlimited support no matter what they do."

Nevertheless, Olmert believes a deal is vital to Israel's long-term survivability as a Jewish and democratic state, particularly because immigration and demographic trends mean that Palestinians could outnumber Israeli Jews within just a few years.

The occupation of the West Bank also is distracting Israel from more ominous threats looming beyond its borders, namely Iran, a country Israel is convinced will soon have nuclear weapons and whose leader has publicly called for the Jewish state's demise.

Analysts such as Grinstein believe the parties involved may set their sights on something less than a full-fledged peace deal.

"Instead of signing an agreement, the more likely option is that we will simply recognize the Palestinian Authority as a state by systematically transferring powers and responsibilities to them," he says.

Bush has a narrow window of opportunity to move toward peace. His term in office ends in January 2009, as does Abbas'.

If history is any indication, an incoming U.S. administration is unlikely to concern itself with the daunting task of Middle East peacemaking during its first term. Olmert has pulled through a string of recent scandals and his fragile coalition could fall apart at any moment.

Says Touval, the Israeli foreign policy adviser: "Whatever we don't finalize or complete by January 2009, we will probably not conclude for a good many years afterward."

That would mean Bush's successor would have to basically start over.

"It's hard to be optimistic," says Dror Etkes, a leading Israeli peace activist. "But I'm also aware that breakthroughs in history don't always happen when people are anticipating them."