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Mideast awaits new leaders, direction in 2009

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Israeli settlements continue to expand on territory earmarked for the Palestinians. Despair among Palestinians has given rise to increased militancy and two intifadas, further eroding goodwill on both sides. Some analysts say the Israeli Palestinian peace track is almost blocked for now, given the distrust between the two sides, the rising popularity of Hamas (which rejects a two-state solution), and the inherent weakness of Israel's unwieldy coalition governments.

"The situation on the ground is really terrible," says Ousama Safa, director of the Lebanese Center for Policy Studies in Beirut. "The Palestinian house is in complete disorder… and the Israelis are not in a position to make decisive conclusions."

Still, Mr. Carter recommends a return to several key proposals that he says present a mutually acceptable basis for a durable peace. They include:

United Nations resolutions such as 194 and 242, which deal with Palestinian refugees' right of return and exchanging land for peace.

• The proposal of the International Quartet – the US, the European Union, Russia, and the UN – which has called for Israeli withdrawal from occupied Arab territory and recommended that Jerusalem be a shared capital for Israel and Palestine.

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