A Palestinian shopkeeper displays mugs with pictures for US President-elect Barack Obama in his shop in Gaza. (Wissam Nassar, Maan Images)

As Barack Obama enters the oval office he will face a series of daunting challenges. One of these is confronting the age old Israeli-Palestinian conflict, which has been seriously, yet unsuccessfully, tackled by every American president since Jimmy Carter. The inability to reach a peaceful solution has not only had fatal repercussions for the people residing in Israel and the Occupied Territories, but has also been detrimental to Middle East stability and to vital US interests in the region.

In recent years, some of the hurdles facing those political leaders who want to reach a peace agreement based on the two-state solution have only grown. The Palestinians are in the midst of an internal fray between the old-guard of Fatah and the fundamentalist Hamas ideologues, and currently there is no agreed upon leadership with which one can negotiate. The Israeli political arena has also become much more polarized, and, it will be practically impossible for whichever party wins the upcoming elections to sign a comprehensive peace agreement with the Palestinians, not least because the settler movement and its supporters will control a critical block in the Knesset.

Obama, however, has a crucial advantage over his predecessors. Several years of political negotiations (from the Madrid conference in 1991, through Oslo, Camp David, Taba, and Annapolis) alongside the publication of different initiatives (from the Geneva Initiative and the Saudi Plan to the Nussaiba and Ayalon Plan) have clarified what it would take to reach a peace settlement between the warring sides.

The two-state solution entails three central components.

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