From The new York Times, August 1, 2008, by HELENE COOPER:
WASHINGTON — The official line in Washington, Jerusalem and Ramallah is that the decision by Prime Minister Ehud Olmert of Israel to resign will not affect American efforts to negotiate a peace deal between Israelis and Palestinians before the end of the year.
Israeli officials said Thursday that Mr. Olmert could still try to reach a peace pact in his remaining time in office. In Tunisia, Mahmoud Abbas, the Palestinian leader, pledged to work with Mr. Olmert and his successor.
...But ...foreign policy experts said...the Bush administration’s efforts to mediate a peace deal between the Israelis and Palestinians this year are unlikely to bear fruit.
“It’s over,” said David Makovsky, an analyst with the Washington Institute for Near East Policy. “Rice was counting on the fact that Olmert’s dwindling political fortunes would lead him to turn to a diplomatic victory as a springboard toward a political comeback. But if he’s leaving office, that doesn’t happen.”
... Can Olmert reach a half-baked agreement minus Jerusalem with Abbas and with Condi looking on proudly in the next several months? Maybe...But can he sell it, let alone implement it, in an environment in which he has no popular support or moral authority, with Hamas threatening from the sidelines? No way....
...The final status issues include the dismantling of Israeli settlements in the West Bank and agreeing on the borders of a Palestinian state, the status of Jerusalem and the fate of Palestinian refugees who left, or were forced to leave, their homes.
“There is zero chance” now, said Ghaith al-Omari, a former negotiator for Mr. Abbas. ...“The best we can hope for is a stabilization package that will make it easier for the next president to engage the process,” Mr. Omari said.