If airline travel counted as progress then you could say that Israel and the Palestinians had a good chance of a deal. Ehud Barak, Israel’s Defence Minister, flies back from Washington; George Mitchell, President Obama’s special envoy, will pitch up in the region again in a fortnight.

Obama suggests that the US will unveil its grand plan in the coming weeks, and his team is talking about a regional summit in September.

Obama himself is the biggest new factor bringing hope; another is the engagement of Israel’s Arab neighbours, provoked by fear of Iran’s rise, and of the effect of a festering Israeli-Palestinian conflict on radical Islam.

"The regional dimension gives a golden opportunity to move forward,” argues Isaac Herzog, a Labour minister in Binyamin Netanyahu’s coalition Government.

Neither Israel nor the Palestinians have moved yet to positions that would make talks plausible, although there are encouraging shifts.

Without Obama and the Arabs, the disbelief on either side about the value of more effort would suggest that the time for a deal might already have slipped away.

Barak wanted to probe whether Obama would accept a fudge in answer to his demand that Israel stop building settlements on the West Bank that Palestinians want for their future state.

Barak, returning, asserted that the US now downplayed the issue. The Israeli press was full of possible fudges the Government would like to float, such as building more floors on to existing buildings, rather than starting new ones, or a short freeze. The version from the US side was crisper.

Obama was sticking to "no expansion, none”, said one official yesterday.

Netanyahu has miscalculated Obama but he’s hardly alone in Israeli politics in not having seen the row coming. Obama advisers say that they took their tough position because of the acceleration of settlements in 2007 and 2008; tough criticism from the World Bank; Israel’s military action in Gaza stopping days before Obama’s inauguration, and Netanyahu’s own intransigence.

Obama has now elevated the issue into a test of whether Israel is serious. In Ramallah several leading figures in Fatah say that they now take a freeze as a condition for re-entering talks.

Bassam Khouri, the Economics Minister, said: "We can’t negotiate while seeing our country every day losing a bit.

Ahmad Ghunaim, a member of Fatah’s Revolutionary Council, attacked a new Israeli announcement that land near the Dead Sea be treated as state land.

Obama’s target of talks is helped by some changes. On Israel’s side, there is now a consensus that most of the West Bank should be given up, argued David Horowitz, the Editor of The Jerusalem Post, to preserve Israel’s character as a Jewish, democratic state.

"Most Israelis are prepared to compromise in order not to be blown up buying pizza or to lose their children in the army,” says Jonathan Rynhold, of Bar-Ilan University.

But the obstacles are huge. On the Israeli side, people still vote for leaders who won’t deliver a deal "because they don’t think it would lead to peace and security”, says Rynhold.

There is doubt whether, in the coalitions that Israel’s extreme democracy produces, any politician could uproot the 70,000 settlers who live east of the 1967 border and outside the main three blocks.

On the Palestinian side "a majority supports violence”, says Khalil Shikaki, a respected pollster.

The best case for Obama’s gamble is that many believe it’s the last chance — if that hasn’t gone already.  

The Times