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The most troubling development over the past 12 months is that the question of Israel's long-term survival is again on the table as a result of both the Lebanon war and the likelihood that Iran will soon be in possession of nuclear weapons.
In a column last week, former New York Times correspondent Richard Reeves quotes Peter Osnos, former Random House chief (who is Jewish) as saying that Israel does not have many choices left.
"Nobody wants to talk about it, but nothing works anymore for Israel," Osnos said. "The negotiated settlement narrative that began with Anwar Sadat's visit to Israel in 1977 has been shatteredâ€¦. Israel will mark its 60th anniversary in 2008. But it remains surrounded by countries and movements that at worst are sworn to its destruction and at best merely despise it. Nations are not immutable. The Soviet empire marked its 60th anniversary in 1977. Fourteen years later, it was gone, a parenthesis of time in Russian historyâ€¦.
"Much of the Western world seems no longer to believe, more than a half-century removed from the Holocaust in Europe, that civilization owes the Jews a homeland anymore... The image of Israel has gradually been corroded by the consequences of 40 years of occupation of the West Bank and Gaza."
Osnos concludes, as most Israelis have, that the combination of the Hamas ascendance and the US invasion of Iraq have made Israel's predicament that much worse. Israel, "is richer and stronger, but in terms of security it is no better off than it was in 1948." And he fears that its long-term prospects are dim.
IT IS HARD to completely reject that analysis. This past summer, missiles from a neighboring state landed on Israeli cities and towns for the first time since 1948. President Mahmoud Ahmadinejad's threats to destroy Israel seem absolutely sincere (though it seems perverse to use that word in this context). He doesn't seem to be posturing and, if he gets the Bomb, Israel will find itself in the position the United States was in during the Cold War, with its security subject to the doctrine of mutually assured destruction (MAD).
And then there is Hamas, which continues to resist the idea of recognizing Israel despite the fact that recognition - and an unconditional end to violence - would almost surely get the desperately needed Western aid flowing into Gaza and the West Bank again.
Nevertheless, I do not share the pessimism of Osnos or the others who see only more darkness at the end of the tunnel. Not that there aren't plenty of reasons for a dark view. The past six years (since the Oslo collapse) have seen both Palestinians and Israelis miss opportunity after opportunity. And the United States, which should be pushing for diplomatic movement, has been AWOL.
But the reason I am not pessimistic is that it appears that some kind of breakthrough is imminent. The reasons are not that hard to discern.
THE PALESTINIANS are desperate. The West Bank and Gaza have slipped into sub-Saharan Africa-like poverty. One Israeli told me he can't understand how the people in Gaza are surviving. With Israel and the international community preventing aid, and their own tax revenues, from getting through, the Palestinians have been reduced to the barter system, and have run out of things to trade.
If the goal of the economic boycott was to bring the Palestinian economy to its knees, it is time to say "mission accomplished."
Hamas has little choice but to moderate its position to meet the demands of the Europeans and the Americans, which is why a unity government - one that authorizes President Abbas to negotiate an end to violence with Israel - is likely to happen sooner or later. That is, if the urgency of relieving the suffering of its own people trumps the religious impulse to fight Israel to the death.
Nor do I believe that Israel is without good alternatives. Contrary to Osnos's statement that "nothing works for Israel anymore," some things in fact do work. The Lebanon war, terrible as it was, succeeded in reducing the Hizbullah threat. It is just possible that Iran has lost its foothold on Israel's border, perhaps for good.
BUT ONE THING that does not work, and most Israelis understand this, is the status quo. And that is why Prime Minister Ehud Olmert is likely to start negotiating with President Abbas, especially if Abbas can negotiate on behalf of a unity government.
What alternative is there? Standing still means a resumption of the intifada, which neither side wants but can probably not avoid without diplomatic movement. Even the Israeli Right seems to understand that.
A third reason we can expect a breakthrough: Iran.
Reports from Washington, Europe and Jerusalem indicate that President Bush is beginning to view the seemingly endless Israeli-Palestinian conflict as an obstacle to his primary Middle East goal right now - preventing Iran from going nuclear.
The Europeans have made clear that they will resist US demands for sanctions unless America starts showing leadership on the Israeli-Palestinian front. And, according to administration officials, Washington is getting the message.
Speaking at the Washington Institute for Near East Policy, Philip Zelikow, Counselor to Secretary of State Condoleezza Rice, indicated that the administration now views a solution to the Israel-Palestinian conflict as central to achieving all its Middle Eastern goals - from Iraq, to Lebanon, to Iran, to the War on Terror.
This is something new: the realization by Washington that movement on the Israeli-Palestinian issue is not only right, it is essential if the US is to achieve progress anywhere in the region.
So the good news stems directly from the bad news - and President Ahmadinejad is definitely bad news. But if his threats have succeeded in moving the Bush administration toward proactive involvement in resolving the Israeli-Palestinian conflict, we actually will have something to thank him for.
The writer is director of policy analysis for the Israel Policy Forum. The views expressed are his own.