OLDIE BUT GOODIE: I just found an old post from Alex Whitlock which still remains true:

In 2000, Barak offered more than what most Israelis were willing to concede and it was rejected by the Palestinians. Barak himself was electorally deposed for his efforts and replaced with someone considerably less diplomatic. In 2002, a plan proposed by Saudi Arabia was rejected by both the Israelis and Palestinians as insufficient. These circles just don't meet. So even leaving aside whose demands are more reasonable, war at this point is inevitable.
"But still," voices cry out, "we must try something. We cannot let the violence and bloodshed continue." Carried with this plea is the implied, but not often expressed and therefore rarely challenged, question of "what harm can there be in trying?"
Again, leaving out the moral implications who is right and wrong, there is procedurally much harm to be done in trying. Israel's actions are, for the most part, a top-down operation. If Sharon orders an attack, it's carried out. If Sharon orders his men to pull back, they do. If they do not, it is within Sharon's power to relieve them of their duties. Sharon, as the head of a state and commander of an army, is held accountable for his actions.
Palestinian actions, on the other hand, are considerably more de-centrilized. The fighters on the Palestinian side are not soldiers in a hierarchal army. They are instead an independent network of agents who take orders from several locations. Therefore, it is possible that even if Arafat is truly a peace-loving individual, he is powerless to stop the actions of Hamas and similar independent entities. Therefore, to the extent that Arafat does want peace, he is incapable and therefore not always accountable for the actions of his people. That means that to effectively create peace, we would not only need the approval of Arafat, but we would also need the approval of the leaders of each and every one of the independent entities that has declared Israel its mortal enemy. In the past, we have generally left it to Arafat to get his people in line and he has been unable, or unwilling, to do so. Indeed, Hamas and Hizbollah have claimed that nothing short of the elimination of Israel would satisfy them.
That, to say the least, is unacceptable to the Israelis. Therefore, by asking Israel to step down and being incapable of making the Palestinians step down, we are creating a strategic environment very favorable to Palestine. So even by trying to be objective and to not take sides, we are de facto taking the side of the Palestinians. It is within our rights to do so if we choose, but we are unable to expect the Israelis to simultaneously accept our opposing position and do as we ask them to.