This is something that I've wanted to see many times in recent history. Israeli and Palestinian leaders persist in such stupidity, and stupidity that is against their own self-interests (not to mention America's) that I have long wished that we'd cut them both off and put real pressure on them to find a viable solution. I always saw it as a non-starter though, what with the very strong Israeli lobby in Washington, but recently more prominent journalists have been calling for it and I think the current economic climate might actually bring it within the realm of possibility.
Abbas' ridiculous posturing about refusing to negotiate has a legitimate gripe behind it: Israel currently has no real intention of making a real peace, but at the same time the Palestinian position does nothing at all to advance their interests. It is in their interest more so than Israel's to advance the negotiations.
And as for Israel it is in their interest to push back against their zealots who dream of "Greater Israel" and who would prolong this conflict in order to systemically settle more Palestinian land. But Israeli leaders are not yet ready to spend the political capital on fighting their own extremists.

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