It is common to assign responsibility to Israel, or more narrowly the present government, or even more narrowly to Prime Minister Binyamin Netanyahu for the failure of the Israel-Palestine peace process.  I''d prefer to put more responsibility on the nature of Palestinian institutions, and the international arrangements that have crippled the Palestinians while claiming to care for them since 1948.
What I see is a Catch-22. The Palestinians have no state; each of several internationally-coddled organizations has acquired an operational veto on major issues, and there is not the Palestine-wide discipline that could assure the implementation of any agreement.
Blame Israel, if you will, for some of the responsibility for this impasse. Israelis have not shown great enthusiasm for creating a Palestinian state. Yet that must be viewed in the context of other constraints, all of which have contributed to Israeli suspicions.
My list of "other constraints" is Islamic extremism, competition among various Muslim governments, organizations, and individuals to insist on the priority of themselves in the competition over what Palestine should be, and what should happen to Israel.
Current events focus on the scheme of the West Bank Fatah leadership to parley its international support into wider recognition of the "state" these same people declared in 1988. It may happen, but it less likely to cure Palestinians of what has crippled them. Neither Hamas nor the wider enthusiasm for destroying Israel will go away, and the international community is not ready for that solution.
There is an instructive comparison with the situation of the Jews circa 1948. They also lacked the mechanisms of a state, and there was competition—sometimes violent—between them. Remember the Altalena.
But that is the difference. Menachem Begin’s iconic refusal to pursue the bloodshed created the sina qua non for a functioning, disciplined state. The newly created Israel used the mechanisms of democracy (imperfect everywhere) rather than violence to reach crucial decisions. 2000 years of stateless suffering may have moved the Jews in that direction. Also, the value of Jewish unity, and the norms against physical violence—especially among Jews—embedded in religious doctrine as well as the culture since the passivity articulated by Rabbi Yochanin ben Zakai.
We should not exaggerate. Jews have no claim on angelic behaviour. Religious and cultural norms were just that—general tendencies rather than hard and fast rules with anything like a police force to back them up. Remember the Jews were stateless from about the year 70 to 1948. Religious nationalists are troublesome. They are not dominant enough to make policy, but may be strong enough to exercise an informal veto, especially in the case of a government led by Binyamin Netahayu.
Yet compare them to the Palestinians, and especially the dominant Muslims among them.
  • A religion that puts a greater emphasis on the role of violence than anything apparent in contemporary Judaism or Christianity.
  • Competition between nationalist and religious movements that glorify violence.
  • The failure of Palestinians to develop national institutions that overcome the power of various religious-based movements, and extended families, tribes, or clans dominant in towns and villages that remain jealous of their power.
What to do?
It depends on who you are and your interests.
If your cause is Palestine, I can urge only pity for them and yourself. Salvation is not at hand.
If your cause is Israel, be patient. This government is likely to squirm or do nothing rather than take a bold move. Salvation is not at hand. It never is for Jews. Doubters can take another look at the New Testament.
Coping is our skill. It works. Take another look at the Israeli economy, polity, and security services.
As ever, the American President is an important variable. Both Israelis and Palestinians should hope for one better informed, wiser, and more moderate about the Middle East than Barack Obama. Meanwhile, both will have to hope that his enthusiasm will not do more than it has to provoke intemperance among Palestinians. Even Thomas Friedman seems to think that the Obama White House does more harm than good in the region. 
If Friedman will only recognize the same about himself, there may be greater hope for the quiet that may foster mutual trust and pave the way for something even more positive.