The US Democrats and the Israeli centre-left want an end to the destabilizing occupation of the West Bank and favour the establishment of a weak, shrunken, and demilitarized Palestinian state which is economically and in all other ways dependent on Israel.
They're opposed by the US and Israeli right which rejects any notion of a Palestinian state, no matter how enfeebled, and instead supports the "natural growth" of Israeli settlements which increasingly drives Palestinians off their land. The ethnic cleansing favoured by Israeli foreign minister Avigdor Lieberman is a more explicit and brutal extension of this stealth policy. These are the main fault lines in US and Israeli politics on which developments in the Middle East have turned.
The objective of the US and Israeli liberals was very nearly reached by the Clinton administration and (Ehud) Barak government at Camp David and Taba in 2000, but Arafat balked when it became apparent he could not sell the deal to Hamas and to much of his Fatah base, who jointly represent the Palestinian masses. This failure neatly dovetailed with the interests of the US and Israeli right who came to power shortly thereafter and who put paid to this process.
Obama's speech in Cairo heralds it's revival after eight years of uninterrupted and widening conflict in Palestine and the region. It will be difficult for the Netanyahu government, shorn of the support of an allied Republican administration in Washington, to stand in the way. As suggested below, it will have to endorse a Palestinian state in theory while seeking to sabotage it's attainment in the next round of talks led by US envoy George Mitchell.
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Israeli officials: U.S. leaves no choice but to okay Palestinian state Haaretz Service June 6 2009
http://www.haaretz.com/hasen/spages/1090715.html
Officials in Jerusalem told Israel Radio on Saturday that there is no alternative but to ultimately agree to the establishment of a Palestinian state.
Israel will be forced to acknowledge the necessity of a future Palestinian state because there are no signs that the Obama administration will yield on this issue, a diplomatic source told Israel Radio.
Government sources in Jerusalem also told Israel Radio that the quicker Israel adopts the road map for peace as the preferred diplomatic initiative, the more likely it will ward off American pressure to concede to a Palestinian state within the framework of an alternative plan that is less agreeable to Israel.
U.S. President Barack Obama announced on Friday that he is dispatching his envoy, George Mitchell, to the region. Mitchell, who is due to arrive on Monday, is expected to meet with President Shimon Peres, Prime Minister Benjamin Netanyahu, Foreign Minister Avigdor Lieberman, and Defense Minister Ehud Barak, according to Israel Radio.
Israeli officials involved in planning the Mitchell visit told Israel Radio that the Netanyahu government will hold firm on its insistence to allow for continued construction in large settlements to meet the needs of the communities' "natural growth."
The officials added that Israel is examining ways to dovetail Jerusalem's needs with Washington's new policy towards the region.
One day after his highly touted speech to the Muslim world, Obama said Friday that the "moment is now" to push forward a two-state solution, adding that both the Palestinians and Israel must get serious and prepare to make some difficult compromises.
"I am confident that if we stick with it, having started early, we can make some serious progress this year," Obama told a news conference in Dresden with German Chancellor Angela Merkel.
"The moment is now for us to act on what we all know to be the truth, which is that each side is going to have to make some difficult compromises," Obama said after talks with Merkel