Conversations began in Washington, to be continued in Jerusalem and Ramallah. It may be too early to speak of negotiations, but it is best that we do not know. More is likely to happen in secret than in public. "Discussions" appears to be an appropriate term for whatever is happening.

There continues to be noise surrounding the discussions, which tells us something about the larger process in which they are occurring. That is to say, the politics of Israelis, Palestinians, and Americans. 
Europeans and others may have to be content with seats in the back of the room, or perhaps on the outside altogether and getting the same news as the rest of us.
Prominent in the noise is what leading politicians of each side are saying are their essential demands, and the red lines beyond which they cannot go in making concessions.
If we take either Palestinian or Israeli declarations of their essentials seriously, we can stop the process now.
Against this is the admonition that knowing your neighbor, adversary, or enemy is the best way of getting on with life.
Another element in the recipe for good life is to abandon the notion of justice. That murky word is worth a lot in the maintenance of civilization, but occasionally ought to be set aside. There are multiple conceptions of justice, each participant in a dispute may have a unique view of justice, and it is certain that Israelis and Palestinians differ on who has violated what. 
Business and politics can proceed without being confused by competing views of justice. Deals come from overlooking claims of what should be, and doing what it takes to make a bargain. The essential aim is mutual profit and minimum loss, which may require swallowing a bit of justice, pride, or a frog, depending on one''s favorite expression.
Ignoring history is also a way to get on to the more important future. We''ve all done things that were bad or embarrassing. Others, as well as ourselves may still be suffering and demanding recourse. We needn''t forgot the unforgettable or unforgivable, but they should not block opportunities for a better future. If Israelis and Germans can cooperate in many endeavors even while remembering the past, Israelis and Palestinians might be able to do no less. 
It would be unwise to identify with any precision at this point the essential demands that would have to be ignored, fudged, modified, or postponed in whatever occurs between Israelis and Palestinians, but it may help to recite in general terms what might end up as deal-breakers. 
  • Palestinian demands that elevate the 1949 armistice line to high importance, and their insistence that any variations be minimal
  • Palestinian demands that no Israelis remain as residents of Palestine
  • Palestinian demands about the rights of refugees
  • Palestinian demands for a capital in Jerusalem against Israeli insistence against dividing Jerusalem
  • Palestinian demands that all Palestinian prisoners be released from Israeli prisons, so they may be honored as freedom fighters
  • Palestinian demands of complete "sovereignty," against Israeli demands to keep Israeli troops in the Jordan Valley indefinitely, or at least for several decades 
Also problematic are Palestinian concerns for Islamic activists in their camp who insist that all of the Middle East must be Muslim or under the control of Muslims, and Israeli concerns for activists in their camp who insist that God''s Promise to the Jews has supreme importance and has not expired. 
Gaza is the virtual elephant that is sitting on the table where discussions occur, even while it is a hundred or thousands of miles away, depending on the locations of the discussions. Rockets still coming occasionally into Israel can disturb the equilibrium of the participants. They might send the discussants home permanently or for a long time if one of the rockets lands on something sensitive enough to produce a massive response from the IDF.
The miracle required for success--either a final agreement on all issues or a significant interim agreement--may have to be a mutual recognition of the futility of each side reciting its view of history, its notions of justice, and the limits to the concessions it is willing to make. 
If success occurs, it might come from the fatigue in the face of endless dispute, similar to the fatigue that led the Germans, French, British and other Europeans to work toward cooperation rather than another round of revenge after World War II. They had the prodding of  a looming Soviet threat and considerable US aid to help them.
The present equivalents of essential prodding to agreement might be the bloody process that has come from Arab spring, as well as deep American (and maybe European, Japanese, and Arab) pockets.
However, while World War II produced an end of warfare in Western Europe, the chaos from Arab spring continues to escalate. If it reaches any further into the Palestinians, it may doom any chance of an Israeli-Palestinian accommodation.
The best bet, on the basis of previous failures, is that discussions may never get to serious negotiations, or that the Americans will find some face-saving way to end the process with a celebration of tiny concessions.
Economic cooperation is the carrot that might tempt Israelis as well as Palestinians, perhaps Jordanians, and maybe even Lebanese and Egyptians if the spirit of peace becomes contagious. The Jews of Israel, their overseas cousins, Arabs from Palestine and surrounding countries and some of their overseas cousins can bring mutually attractive elements of capital, creativity, management skills, and underemployed labor to joint ventures.
Both Israelis and Palestinians have long histories and bitter memories. But if the Europeans could overlook theirs, there may be hope for the Jews and Muslims.
Israeli and Palestinian leaders both know the problems in reaching accommodation, and may be tired of the same old failures. For each it will involve an assessment of what will assure support and/or avoid a rebellion of political colleagues. Both Mahmoud Abbas and Benyamin Netanyahu are linked with restive party colleagues and coalition partners, nipping at their heels and demanding a firm stance against the temptations of compromise.
Americans are prodding, and hinting that their wallets will be open or closed, depending on outcomes.
It isn''t a time for optimism or pessimism, but for waiting.