Some say that the Palestinians are driving what Israelis view as a hard bargain because they have already lost some three-quarters of historical Palestine under the pre-1967 borders.
But there is another factor: In the long run, contrary to standard discourse, the Palestinians may not be the weaker party at all. While they suffer in various ways from the Israeli occupation of the West Bank and east Jerusalem, it is the Israelis who may actually need a partition of the Holy Land more.
That's because Israel proper, within its recognized pre-1967 borders, has some 6 million Jews and almost 2 million Arab citizens. The West Bank, Gaza and east Jerusalem have almost 4 million Palestinians among them. If Israel does not pull back, say withdrawal advocates, near-parity in historic Palestine is already the case, and an Arab majority may follow that cannot forever be denied full democratic rights. It is a deep dilemma that animates many a dinnertime debate: For decades Israelis were told they may have to make "painful sacrifices" in exchange for peace. Now the narrative is shifting: They may have to do it regardless, for demographic salvation alone.
This understanding may be dampening Palestinian urgency to strike a deal.
Several times in recent years they did not accept offers Israel considered far-reaching. In the most recent, former Israeli Prime Minister Ehud Olmert says he offered Palestinian President Mahmoud Abbas a state in Gaza and 95 percent of the West Bank, and a share of Jerusalem. Palestinians say they could not agree on details and that Olmert was a lame duck who could not deliver. In any case it is hard to imagine Olmert's successor, the more hawkish Benjamin Netanyahu, going further or even coming as close.
What will Israel do if a peace deal remains elusive?
Some people are talking about accepting that Israel, combined with the West Bank and maybe Gaza, will simply be a bi-national state, even if this means Jews will eventually be dominated by Arabs. Even some nationalists seem to accept this and consider it preferable to giving up the land.
Some propose that neighboring Jordan allow West Bank Palestinians to vote in its own parliamentary elections as a way of giving Palestinians in Israeli-controlled areas a version of democratic rights.
Others hope for a partial settlement that will give the Palestinians a state in most of the territory but less than they want and in exchange Israel would not demand "end-of-conflict," with remaining issues left for later. Palestinians reject the idea, believing they would be left without leverage to gain anything more.
Still others expect Israel to unilaterally pull out from much of the area. But the Gaza precedent undermines this: Israel pulled settlers and troops from the coastal territory, which is detached from the West Bank, in 2005; Hamas militants soon took over, and years of sporadic rocket fire followed.
Yet another possibility: To prevent rockets from the West Bank, Israel might declare borders of its choosing, remove the settlers on the "Palestinian side," but maintain a purely military and more easily reversible military occupation.
Meanwhile, here's what awaits the negotiators set to try again:
Under the 1947 U.N. plan dividing British-ruled Palestine into a Jewish and an Arab state, Jerusalem was to be an international city surrounded by Arab territory. But the Arabs rejected the partition, and in the war that followed, Israeli forces blazed a path to the city and occupied the western part of it. Jordan seized the city's eastern sector, containing the Old City with its sites holy to Muslims, Jews and Christians, as well as the surrounding "West Bank."
In the 1967 war two decades later, Israel occupied east Jerusalem as well as the West Bank and the Gaza Strip, which had been ruled by Egypt, taking over all the territory the U.N. had slated for the Palestinian state. It annexed only east Jerusalem, expanding the city's borders into a slice of the West Bank; the world community rejects the annexation.
The idea of sharing Jerusalem sounds straight-forward and fair: The city would be the capital of both states, with Jewish-populated areas in Israel and Arab-populated areas in Palestine, alongside some equitable arrangement for the Old City.
But it is a cartographer's nightmare: Israel has surrounded and peppered the Arab core of east Jerusalem with so many Jewish neighborhoods that the roughly 200,000 Jews in the occupied sector almost equal in number the Arabs who live there.
Somehow connecting these areas with Israel would yield a border that might end up snaking through dozens of miles (kilometers), be bewilderingly difficult to police, and make the divisions of Berlin and Belfast seem reasonable and simple by comparison.
And if the two sides made do without border controls, people could move between the states through a portal of sorts in Jerusalem, proceeding anywhere else in Israel and Palestine. That does not work for Israelis, who would want to control Palestinians' entry for fear of continued hostility by some.
The Palestinians demand that Israel recognize the "right of return" for Palestinian refugees, defined as more than 700,000 people who fled or were driven from their homes in what is now Israel, as well as critically their millions of descendants.
But for Israelis, allowing potentially millions of Palestinians into Israel contradicts the logic that might compel them to give up the strategic West Bank to begin with the desire to guarantee a Jewish majority in Israel.
Some Palestinian officials have hinted that the issue could be finessed, suggesting that as long as Israel accepts the principle of a right of return, the implementation will not be on a significant scale. But others disagree, and for many, especially refugees scattered across the region, the issue has taken on a sort of sanctity. Signing it away will not be easy for Abbas, and this circle has yet to be squared.
Israel wants the Palestinians to accept Israel as the "Jewish state." For Palestinians this not only legitimizes what many of them view as a theft, but also contradicts the idea of a refugee return. Abbas says Israel did not ask for such recognition when it struck peace deals with Egypt and Jordan, and uses the demand merely to obstruct.
For Israel itself, the issue is problematic: Where does the "Jewish state" leave the one-fifth of Israel's 8 million citizens, within the pre-1967 borders, who are Arabs?
Jerusalem aside, the borders seem relatively workable. The Palestinians want the entire West Bank, in addition to Gaza, and appear willing to allow Israel to move the borders to incorporate some settlements as long as they are compensated by equivalent amounts of Israeli territory. Abbas has said such a swap should be minimal but since most of the 360,000 West Bank settlers live close to Israel's pre-1967 frontier, even minor map changes might attach most of them to Israel and reduce the number of settlers to be evacuated to about 100,000. That reduces Israel's pain and makes a pullout more plausible.
Several large settlements complicate things. Ariel, right in the middle of the northern West Bank, would require a highly intrusive "finger" into the territory to be linked to Israel. Maaleh Adumim, just east of Jerusalem, is also inconveniently located for Palestinians who want unencumbered travel from Ramallah to Bethlehem.
For religious Israelis, the West Bank is a biblical heartland whose loss would be excruciating. But for most, it is an inhospitable place where they almost never set foot. Still, it is very strategic: Losing the territory would make Israel barely 10 miles (15 kilometers) wide at its narrowest point and put potentially hostile Palestinians within rocket range of Tel Aviv, Jerusalem and Ben-Gurion International Airport. This is the issue that Netanyahu, a security hawk not known for a devout lifestyle, has put front and center throughout his career.
Netanyahu wants demilitarization of any part of the West Bank that Israel cedes to the Palestinian state. Abbas accepts this and proposed NATO forces patrol the borders. But he has rejected Netanyahu's demand that Israel maintain a long-term military presence on the West Bank's Jordan Valley, which runs along the Jordanian border.
Even if Netanyahu and Abbas reach a deal, a problem would remain: Hamas still controls Gaza and wants to set up an Islamic state in all of historic Palestine. Hamas speaks of long-term cease-fires under some circumstances, but generally makes clear it would not consider a partition deal to be the end of the conflict.
Israel currently holds nearly 5,000 Palestinians on security offenses, ranging from stone-throwing and membership in groups outlawed by Israel to deadly attacks. More than 3,000 have been convicted; others await the end of legal proceedings and dozens are being held without charges or trial.
On Sunday, Israel's Cabinet agreed in principle to release 104 long-held prisoners, most convicted of deadly attacks on Israelis, in four stages linked to progress in negotiations. Netanyahu absorbed scathing criticism from bereaved families and Israelis who saw it as a security risk. But he preferred this form of enticement to another Palestinian demand: Freezing construction in the very settlements that may one day be dismantled.