I continue to believe that a bilaterally negotiated two-state solution between Israel and the Palestinian Liberation Organization is the optimal outcome and is possible. But not under the leadership currently in power in Jerusalem, Ramallah, Gaza, Cairo and last but not least (on the basis of its 10-month performance) Washington. In the absence of credible hope for a near-term solution, a number of alternative paths to progress present themselves. Two are reflected in evolving realities on the ground, hence appear to be the most pragmatic. They are not mutually exclusive.

One is Palestinian Authority Prime Minister Salam Fayyad’s plan to create the institutions of Palestinian statehood in the course of two years. If, by August 2011 when those two years have elapsed, Israel and the PLO have not successfully negotiated a solution, the Palestinians would turn to the United Nations for recognition and third-party international intervention.

This is “bottom up” state-building that has proven itself thus far. Fayyad, with international help, is successfully creating security, economic and governance institutions. His efforts are not incompatible with those of Israeli Prime Minister Benjamin Netanyahu regarding “economic peace.” They have already produced the best security situation in the West Bank in years. There is something to work with here. Besides, as of today this is the only constructive game in town.

Obviously, to make Fayyad’s scheme work, state-building must be paralleled, in real time, by serious negotiations. If these negotiations are tried but, almost inevitably (like all their predecessors), fail due to a lack of agreement regarding core final-status issues, then at least by August 2011 the international community will have something substantive to sink its teeth into: namely the makings of a Palestinian state on the ground, along with clearly defined gaps between the two sides’ positions to be bridged through international intervention.

But Fayyad’s scheme, along with other variations on unilateral or partial peace process themes being discussed today, applies to the Gaza Strip only in theory. Assuming Egypt’s prolonged efforts to bring about genuine Palestinian geographical and political unity continue to falter, any peace and state-building achievements that emanate from Ramallah will not apply to the Gaza Strip and Hamas. This brings us to the second non-bilateral process that can be characterized as an evolving reality: the existence of two separate Palestinian proto-state entities or, in political shorthand, the three-state solution.

As matters stand, whatever Fayyad accomplishes and whatever Israel and the United States contribute in parallel toward Palestinian state-building and Israeli-Palestinian reconciliation, this will not directly affect Hamas in Gaza. The current international attitude toward Gaza can be characterized as non-benign neglect. Israel, Egypt, the Quartet and the PLO all prefer to do nothing about Gaza in the blind hope that the reality of the territory will either “go away” or at least not bother them too often.

The economic blockade of Gaza continues; the military situation can be characterized as quiet for the time being, but only for the time being; all Arab parties are paying lip service to non-existent Palestinian unity; and Egypt’s mediation efforts are tailored to suit its own agenda of making sure that Gaza remains Israel’s problem, not Egypt’s.

This situation will not last forever. Anyone who hopes that success in the West Bank – economic, political, diplomatic or all of the above – will somehow bring Hamas rule in Gaza crashing down rather than inspire the movement to invoke serious acts of sabotage – is gambling against the odds.

Better to recognize that the strategies for the Gaza Strip have not succeeded and must be revised if disaster is to be averted. For example we must recognize that the economic strategy applied to the territory has been downright counterproductive, inflicting collective humanitarian punishment on Gazans without producing any political progress in return.

We must also recognize that Israel is the only party in the Middle East talking to Hamas exclusively through Egyptian good offices, and is getting nowhere (if there is a breakthrough on prisoner exchange, it will apparently be thanks only to the good offices of Germany). And we have to recognize, as well, that the international community and Israel need to offer to talk to Hamas directly about long-term coexistence if a productive solution for the West Bank can be deemed sustainable.

Yossi Alpher is a former director of the Jaffee Center for Strategic Studies at Tel Aviv University, and was a senior adviser to Prime Minister Ehud Barak. This commentary first appeared at bitterlemons.org, an online newsletterpublishing contending views of the Israeli-Palestinian conflict.