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More than 160 Palestinians, including 100 noncombatants—more than 30 of them children—and six Israelis were killed in the latest cycle of outrage and recrimination that marks the dismal status quo in the Middle East. It should come as no surprise that the latest violence achieved little more than to push both sides of the conflict to greater political extremes. Despite the pounding endured by ordinary Gazans, Hamas has emerged emboldened and “victorious” since the cease-fire. And after another round of targeted assassinations by Israeli forces, new leaders have stepped forward within Hamas who threaten to be even more militant than their predecessors.

Similarly in Israel, Prime Minister Benjamin Netanyahu’s Likud Party has lurched even further to the right. The “moderate” Ehud Barak, once considered a strong challenger to Mr. Netanyahu and a politician who had seemed capable of moving along what remains of the peace process, has decided he has had enough of Israeli politics. Now a government coalition that will increasingly lean toward the outright annexation of parcels of the West Bank seems the likeliest outcome of upcoming Israeli elections. Tacitly endorsing illegal settlements, ignoring opportunities to advance the peace process and distracted by periodic skirmishes with Hamas, the current Israeli leadership seems to have lost all focus on a coherent strategy toward a peaceful resolution of the Middle East conflict. They have joined with Hamas as silent partners in the depressing status quo.

If the recent flare-up between Hamas and the Israeli Defense Forces seems painfully and pointlessly repetitious, there have been other developments that suggest the possibility for real change in the long conflict’s script. Mohammed Morsi, the one-time Muslim Brotherhood member who is now Egypt’s president, has emerged as a credible powerbroker during cease-fire negotiations. The ascendance of Arab Spring political leaders who, like Mr. Morsi, forcefully represent the Arab world’s widespread sympathy for the plight of Palestinians may force a change in Israeli policy.

In New York a U.N. vote on Nov. 29, the 65th anniversary of the U.N. resolution that first called for two states in Palestine, elevated the Palestinian Authority to the status of non-member observer state. This suggests new possibilities, even as it has provoked familiar displays of outrage. Despite the overwrought rhetoric of some on the Israeli right and their supporters in Congress, the enhanced status for Palestine is not an act of “diplomatic terror.” The resolution reads, in fact, like a lengthy plea to return to negotiations over the difficult issues that remain.

Zionist and Islamist maximalists have had their eyes fixed on a prize neither can secure while dedicating themselves to a conflict that must be inevitably refreshed with the blood of innocents. Responsible U.S., European and now regional Islamic leadership should refuse to participate in the farce being made of the peace process. The General Assembly vote offered an opportunity for the United States to join European efforts to awaken Likud from its reveries of a Greater Israel to the possibility of real peace. Instead, the Obama administration applied all the diplomatic pressure it could muster in what would prove an embarrassing attempt to thwart the vote. It should not waste its energies and credibility this way again. It should support judicious but meaningful steps toward Palestinian statehood, beginning with measures to protect Palestinian territorial integrity, as well as the security of the Israeli people.

In a reinvigorated diplomatic effort, the Obama administration must urge Israel to halt settler expansion on the occupied West Bank and guide it back to the negotiating table before the next cycle of violence begins. Likud hardliners must be pressured to reconsider policies that undermine the peace process and make a viable Palestinian state impossible. If they cannot be so persuaded, then the administration should proceed on its own in diplomatic efforts to make that two-state solution a reality. Despite everything that has happened, the possibility of peace remains tantalizingly within reach. The two-state solution remains a viable option—in fact, perhaps the only viable option.

No less a figure than former Israeli Prime Minister Ehud Olmert supported the Palestinians’ U.N. bid as “congruent with the basic concept of the two-state solution,” arguing it was time to “give a hand to” moderate forces among the Palestinians. Referring to the Palestinian Authority’s president and prime minister, Mr. Olmert noted, “Abu-Mazen and Salam Fayyad need our help. It’s time to give it.”

Mr. Olmert is ready to begin serious negotiations based on the 1967 borders. Shouldn’t the Obama administration be just as ready to lend a hand for peace?