Secretary of State Hillary Clinton went to the Middle East and inadvertently created yet another crisis for the Obama peace initiative. It's not so much that she badly mishandled everything -- although that argument could certainly be made -- it's more that I think her difficulties demonstrate how complicated and in some practical senses almost impossible the American diplomatic task at hand really is.

First, she seemed to reverse American policy regarding a settlement freeze by praising Netanyahu's proposals for a partial and temporary settlement freeze as "unprecedented" and by reiterating the administration's long-standing request the Palestinians return to negotiations "without preconditions," in other words without a formal American-Israeli understanding on a settlement freeze. Then, following a firestorm of criticism, she seemingly backtracked from the backtrack and reaffirmed US policy that there should be a complete settlement freeze, but added that Netanyahu should receive credit for how far he has been willing to go although this is still "not enough."

Examining her language dispassionately, one could easily defend the Secretary's characterization: for Netanyahu, this is, in fact, unprecedented, just as his grudging and not entirely convincing endorsement of the necessity of a two-state solution was. He has never said anything like this before, or been willing to take such measures. Since his first term, and even more dramatically displayed during the formation of his second cabinet, we have known Netanyahu belongs to the deal-making class of individuals, willing to do things that are ideologically, emotionally and politically unpalatable in order to remain in power. Therefore, and because what he has offered the United States, even though it may be unprecedented for him, is completely insufficient for everybody else, including the Obama administration, politically describing his proposals as "unprecedented" was extremely unfortunate because it gave the impression that the administration is satisfied with his position. It's extremely helpful that the Secretary clarified that this is not so, but the political damage has been done in spite of the fact that a case can be made for the factual validity of the language itself.

So where does that leave us? First, I think it's pretty clear, as I've been saying on the Ibishblog for many, many months now, that they are either is or imminently will be an informal understanding between Israel and the United States that amounts to something very close to a settlement freeze, especially outside of Jerusalem. There will be latitude, and Israel will cheat, but it seems that the Americans and Israelis have found some kind of private, informal arrangement that allows the administration to push the issue to the side for the moment. However, what is unusual in this scenario, and what distinguishes the Obama administration from previous ones, is that the United States has thus far declined to formally accept Israel's "unprecedented" compromises on the issue and continues to insist that continued settlement activity is "illegitimate." The issue therefore remains on the table, if pushed to the side in favor of the resumption of permanent status talks.

The problem is that even though Netanyahu certainly dreads the notion of serious permanent status negotiations with realistic terms of reference as outlined by Pres. Obama at the UN, for the Palestinians returning to negotiations in the near future is both diplomatically wise and politically untenable. The recent flap over Clinton's remarks in Israel has only complicated matters that have become extraordinarily difficult for the PLO because of the inability of the United States to achieve a satisfactory agreement on settlements and, perhaps even more damagingly, the scandal over the Goldstone report. There is a constant tension among the Palestinians (and for Israelis also, one should add) between what makes sense diplomatically at the international level in terms of advancing the national interest and what public opinion at home will bear politically.

This tension between the diplomatic and political registers was dramatically played out with regard to the Goldstone report. The PLO first operated entirely at the domestic political register, championing the report at every stage and embracing it with gusto. Then, recognizing that there was a pretty impenetrable consensus of opposition to adoption of the report by either the Security Council or the ICC by most if not all of the permanent members of the Security Council, and not just the United States, as well as serious American opposition to the PLO pushing the report in multilateral forums, they switched to the diplomatic register and decided that the limited potential benefits of pressing forward with the report were not worth the considerable diplomatic costs. However, they did so without preparing public opinion in any way, or explaining why they took the decision or even who it was that decided to agree to a delay in the Human Rights Council. There was generalized confusion among the Palestinians which predictably led to generalized outrage, and reversed at least six months of a steady accumulation of credibility by the PLO, the PA and President Abbas personally, especially vis-à-vis Hamas.

In other words, the Palestinian leadership was bound to pay a significant price with regard to the Goldstone report either internationally at the diplomatic level or domestically at the political level. In the event, the entire affair was so badly mishandled that they ended up paying both prices almost in full.

This is not only the backdrop, of course, for the great difficulty the PLO faces in being asked to return to negotiations without a formal settlement freeze and following the Goldstone debacle, but it also helps explain why Clinton was tacking towards pressuring the Palestinians rather than the Israelis in her recent Middle East trip. American diplomacy during the Obama administration has had to delicately balance pressure on both sides that is met with considerable political resistance at every stage. When the administration was pressuring Israel on a settlement freeze, many Israeli and pro-Israel voices were screaming at the top of their lungs about being "abandoned," "thrown under the bus," and "betrayed" by the new Neville Chamberlain. Now the Palestinians are being pressured to return to negotiations with nothing to show for their own significant and largely successful efforts to meet their Roadmap obligations regarding security, and having been placed in an impossible position over the Goldstone report, Palestinian, pro-Palestinian and Arab voices are expressing similar disgust (meanwhile, AIPAC "applauds").

The final complication is the prospect of new Palestinian elections in January, as announced by Abbas, or in June as suggested by the Egyptian reconciliation plan signed by Fatah but not by Hamas. It seems very clear at this stage that Hamas doesn't want anything to do with any elections because it does not feel capable of performing well in them (and also, of course, because they are ideologically disinterested in democratic processes and other "un-Islamic" procedures). However, it is also possible that they might reverse themselves, even fairly quickly, on this matter and having called for elections, the PA and Abbas have to proceed as if they were going to happen even though Hamas will probably make them impossible. This makes it all the more difficult for Palestinians to emphasize the diplomatic, national interest register over the domestic, political and ideological register.

In fairness, it should be said that, as Kadima leader Tzipi Livni pointed out at the Knesset opening recently, Netanyahu appears to have absolutely no strategy whatsoever other than stonewalling and saying no to everything and everyone, and no vision whatsoever for Israel's future or dealing with its imminent crises. That's what you expect opposition leaders to say in Parliament, of course, but in this case it stings more because it has so much truth to it. Netanyahu holds the Prime Minister's office, for the moment quite effectively, and he has therefore a large stack of papers with the words "office of the Prime Minister" embossed at the top. Unfortunately, the pages are entirely blank. At least the PLO knows where it wants to go. I don't think the same can be said of Netanyahu (although it might, unfortunately, be said of some of his even more extreme Cabinet colleagues).

It's an extraordinary thing to plunge into a vertiginous despair without leaping off some kind of precipice of hope. I don't think any well-informed, serious observer was really moved to any kind of euphoria by the Obama initiative, Cairo speech or any of the extremely positive innovations since his inauguration. The situation is simply too grim, too complicated and too resistant for any such reading to have been taken seriously by informed observers. So it's a little odd to see people gripped by dysphoria without ever having experienced euphoria. Perhaps we could say that the Middle East peace process used to be a manic-depressive experience, and is now simply depressive, and for some people almost suicidally so. And it must be said, things on the ground, in the region and between the parties didn't look at all promising in January, and they don't look any better now.

But there is an important difference: there is, in fact, no indication that the Obama administration is giving up, throwing up its hands, or walking away, as many suspect the Israeli prime minister and others have been hoping. I have argued in several published news reports that the administration views Middle East peace as a marathon and not a sprint, and is a process of attrition rather than spectacular breakthrough. I think because they tried for an early breakthrough (not a bad idea), and only made some limited progress that has offset by perhaps even more significant deterioration, many people have the wrong impression that President Obama and his team actually thought they had a very good chance of producing major progress in an early stage and are now disappointed and confused, with their policy and approach in complete disarray. I don't think there's any evidence for this whatsoever. I think Clinton's trip demonstrates that engagement is not ending, but continuing if not intensifying.

Plainly the administration has been trying to communicate subtly that it expects movement to be slower than it had been pushing for, but I don't think there's any reason to believe that they are surprised by this. The fact that Obama made his first phone call from the Oval Office within about 10 minutes of his presidency to Pres. Abbas, and appointed Special Envoy Mitchell on his second day in office, and spent the entire campaign talking about how he wouldn't wait until the end of his administration to deal with this issue, all suggests that he started right away precisely because he knows that in all likelihood this is going to take a long, long time and that it is a matter of wearing down the stonewalling parties rather than creating some kind of epiphanic, miraculous transformation.

Meanwhile, the PA's state and institution building project proposed by Prime Minister Fayyad provides an extraordinary parallel and complementary process that can strengthen both the Palestinian and American strategic positions vis-à-vis Israel and that can begin to create significant physical and administrative changes on the ground that improve the political context in which diplomacy is taking place. As I argued strongly in the Guardian yesterday, it is essential that this plan receive not only financial and technical support, but also diplomatic and political protection, from the Arabs, the Europeans and, above all, the United States. And, as I pointed out, it will be extremely difficult for Israel to block specific projects that are being carried out in conjunction with American and European agencies and institutions.

As long as the administration persists, and remains -- as all its leaders keep saying it is -- "determined" to see this process through, there is no reason for anyone to despair. There is, after all, no other choice: it's either a slow, gradual and, yes, painful, inching towards a two-state agreement, or it's war, conflict and occupation into the foreseeable future and catastrophe all around. Despairing, giving up and walking away is too irresponsible for this administration, for the United States, or for anyone with the best interests of Palestinians, Israelis and Americans at heart. It's a nihilistic reaction, and it lacks both political and intellectual substance and moral fiber.