LONDON Everyone knows that. Yet somehow the two sides cannot seem to reach this apparently obvious destination. Even back in 2000, when the Israeli cabinet was packed with doves and the peace process was led by a US president engaged in every last detail, the deal remained elusive. Since then, it has fallen ever further out of reach.

The conventional explanation blames the leaders, weak on both the Israeli and Palestinian sides and fatally disengaged in Washington. The result is that the peoples themselves, even if they yearn for peace, have grown cynical about the two-state solution that would make that peace possible. “More than three-quarters believe it's not feasible,” veteran Palestinian pollster Khalil Shikaki has told me from his office in Ramallah. Palestinians doubt Israel's intentions instead of giving up land, Israel continues to settle on it.

Witness Monday's announcement of another 750 housing units in the Giv'at Ze'ev neighbourhood, on the wrong side of the Green Line that marks the 1967 border.

What's more, the two-state solution now carries some unattractive baggage its lead advocates are the Bush administration, seeking a legacy; the Israeli government, seeking relief from the demographic prospect of ruling over a population in which Jews and Arabs have numerical parity; and an unpopular Palestinian elite represented by President Mahmoud Abbas. If those are the cheerleaders, it's hardly surprising that few Palestinians are waving the banner for two states.

Among Israelis, the idea fares little better. They say they have withdrawn from occupied territory twice recently from southern Lebanon and Gaza and their reward has been a hail of rocketfire.

Besides, while the Palestinians are divided between Hamas and Fatah, there is no viable Palestinian partner who could rule a neighbouring, peaceful state.

If that's the situation, what could change it. The current strategy, trumpeted at Annapolis, is to get Israel and Abbas to come to an agreement. Never mind that Abbas's writ does not run in Gaza, and so such an accord would only be hypothetical “a shelf agreement” it would, say its advocates, have great impact. It would restore faith in diplomacy, and Hamas would soon have to fall in line.

That's how Tony Blair, part-time international envoy, sees it. He argues that Hamas should be kept out of any peace process until a deal is done. Once it has, and especially if the accord is popular, Hamas will come under pressure from its own people to sign up. Advocates add that the Israeli public would also lose its cynicism once the elected leaders of Israel and the Palestinians had shaken hands on an agreement.

It sounds straightforward enough, but there's precious little sign of it. The Israeli prime minister is hardly stretching every sinew to get such a deal. Instead, as the Giv'at Ze'ev decision shows, he's bowing to pressure from hardline elements in his own coalition. Nor, says one Israeli government insider, are rocket attacks and terrorist murders in Jerusalem the ideal “atmospherics” for negotiations. And yet there is all too little countervailing pressure in the pro-peace direction from the one player that could make a difference Washington. Haaretz editor David Landau despairs at the lack of urgency in the talks, contrasting it with the “frenetic” pace back when Clinton was in charge. “There's nothing like that now,” he says, despite all the fine words at Annapolis.

Even if there were an agreement, it might not help. If an accord ended up gathering dust, it would discredit the two-state idea even further, confirming its status as inherently impractical. And both sides fear such a text would end up being the starting point for a future round of talks, from which they would have to compromise yet further.

There is another way not to wait, but to bring in Hamas now. Already, an unofficial channel between Israel and Hamas via Egypt, though denied, has brought a lull in fighting. The talk is of a tahdi'a, a temporary ceasefire. Israeli sources tell me they could accept that, so long as Hamas doesn't use the pause simply to regroup and re-arm. If there is an end to Hamas weapons smuggling, as well as rocket attacks and terror operations, Israel will agree to hold its fire.

Plenty want to go further, including Hamas in the diplomatic search for an agreement. Each week seems to bring another eminent, if retired, figure from the Israeli security establishment suggesting talks with Hamas. In a Haaretz poll last month, 64 per cent of Israelis said they would approve.

The prize would be great indeed an agreement with the entire Palestinian nation, rather than just part of it. The risk would be high, too Olmert could lose his coalition and could see Palestinian moderates eclipsed (just as talking with Irish republicans eventually eclipsed more moderate nationalists).

Finally, there might be a way to rescue the two-state solution that does not involve the Israeli-Palestinian conflict so much as swerve around it. It's been tried at least three times before and come tantalisingly close. The plan to make peace with Syria first.

The rewards for Israel would be obvious. Instantly, it would have what its founding prime minister, David Ben-Gurion, dreamed of peace accords with all its immediate neighbours, Egypt, Jordan, Syria and therefore Lebanon. Moreover, the potential spoilers to any two-state solution Hamas, Hizbullah and Syria itself would no longer be a threat. “Syria is a lung through which Hizbullah breathes,” says Palestinian negotiator and analyst Hussein Agha if Syria reconciled with Israel, the organisation would have to end its confrontation with Israel. Hamas would be in the same position. Even Iran would have to alter its behaviour. The problem of the two-state notion was never its content, says Agha, only its context and this would be the right context.

Suddenly Israel would feel much safer in coming to an accord with the Palestinians, even a united Palestinian entity that included Hamas. The two-state solution would look less like an impossible dream and more like an item of unfinished business.

Is it possible? Syria, conscious of the expectations of Arab solidarity, would be unlikely to make a separate deal with Israel at the apparent expense of the Palestinians there would have to be some careful sequencing to show progress on both tracks.

But the good news is that a rapprochement with Syria is discussed at the highest levels in Israel, even forming part of an intelligence briefing for the prime minister this very week.

The bad news is that Israel insists it has not yet had sufficient evidence that Damascus is ready to do what it takes to make peace.

It also has to be seriously doubted that Olmert is strong enough to play his part and give up the Golan Heights conquered in 1967.

There is one last obstacle in the way of a Syrian-Israel peace. Those in the know say flatly that the Bush administration will not allow Jerusalem to talk to Damascus, which it deems an associate member of the “axis of evil”. Put it down as one more reason why the world waits, ever more impatiently, for Jan 20, 2009, the day George W Bush will at last be gone. — Dawn/ The Guardian News Service