The Palestinian/Israeli conflict has entered a new era.  Since the UNSC passed Res 242, it had been focused on the "peace process," which included the Madrid Conference, the Oslo Accords, the Roadmap, Annapolis, and, finally, Obama's heavy-handed attempts to impose a solution.

One of the reasons why Obama couldn't get the PA to negotiate after three years of trying is because the PA was laying the groundwork to go another path, a path that would circumvent the peace process and rely on the intervention of the U.N.  The PA realized that it had gotten all it could through negotiations, which is virtually nothing, and that to continue on that path meant that at the end of the line, it would have to sign an end-of-conflict-agreement with Israel.  This, it was unwilling to do.

So instead, the PA has decided to get what it wanted from the international community and the U.N.  It has spent the last three years lobbying the member states of the U.N. to support its bid for recognition as a state whose borders aligned with the '49 Armistice Lines.  Its goal was to reach this stage without having to concede anything to Israel, much less sign an end-of-conflict-agreement.  From this stage it would go on to fight for the lines in the Partition Plan recommended by the UNGA in Res 181.

Even though Obama tried his damnedest to get Israel to agree to negotiate based on the '67 lines and swaps, Netanyahu held firm.  Obama ended up asserting that he would veto the PA bid in the Security Council and called for a negotiated settlement.  Because he is now in the countdown to elections, he turned the "peace process" over to the EU, who made a proposal in September for the parties to have preliminary talks for a month and then to present comprehensive proposals for borders and security and then to finish a peace agreement before the end of 2012.

The EU failed to get the talks to begin but did get Netanyahu to agree to present comprehensive proposals in three months.  Apparently the PA had presented such a proposal at Annapolis.

JPost reported when Blair was questioning whether there was an basis for negotiation when he was in Israel on October 27/11:

Blair explained in his interview that the Quartet was trying to get detailed proposals from Israel and the Palestinians on borders and security, to gauge how wide the gaps were, and whether there was a basis for negotiation.

On Oct 31, 2011,  the PA had a pyrrhic victory in getting UNESCO to admit Palestine as a member state.  The fallout from that "victory" was that the U.S. and Canada, inter alia, are now withholding funds from UNESCO.  Furthermore, Israel has signaled her displeasure in word and in deed.  Netanyahu announced the construction, without delay, of another 2,300 units east of the '67 lines, and that Israel would withhold the payment of taxes collected by her on behalf of the PA.

The significance of this announcement was that Netanyahu was boldly saying -- not only to the PA, but to the world -- that Israel is keeping Maaleh Adumin, Gilo, and Efrat, three major suburbs of Jerusalem lying east of the '67 green line, and is undeterred by demands that Israel not prejudice the outcome of negotiations or do provocative steps.

Condoleezza Rice was interviewed by Foreign Policy:

FP: This is the biggest foreign-policy issue of this week: The U.N. crisis caused by the Palestinian membership in UNESCO. And it's a crisis that's only getting larger and larger. There could be up to 16 U.N. organizations, including the IAEA and the World Health Organization, where the U.S. will have to withdraw based on the law if the Palestinians are admitted. What are we to think of this, and what should be done to get us out of this crisis?

CR: Well, you know, actually, if the U.N. wants to go down this road, let them see how well they do without U.S. support. I don't have any sympathy for UNESCO or anybody else that decides they are going to jump over what has long been the way we're going to get to a Palestinian state, which is negotiations between Israelis and Palestinians.

The PA for its part is now mooting the idea of disbanding the PA.  It is suggested that such a move would punish Israel, but Israelis think it would be for the best.  For one thing, it would be the end of the Oslo Accords and the Roadmap, including the Saudi Plan.  It may or not be the end of the financial assistance from the U.S., EU, and Saudi Arabia to a lesser extent.  Israel would outlaw the PLO, Fatah, Hamas, and all other terrorist groups calling for the destruction of Israel.  And so on.

Condoleeza Rice also told AP that the gap has only widened "and they're running out of time." She did not sound optimistic for a peace settlement, or even for new talks, anytime soon.

"When they're not talking, they're sliding backward," Rice said.

So what has Israel been doing in the meantime?

At a recent lecture in the last week of October, Boogie Yaalon, Vice Prime Minister and Minister of Strategic Affairs, said,

Time is not working against us, as many say. It is working in our favour because we make use of time.  We build, we develop. we grow, we invent, we have babies. Time works for those who make use of it.

Vice FM Danny Yaalon, at another lecture, said the same thing.  I later asked his key assistant if Israel is just building, or if it has a plan that it is following.  He affirmed the latter.

Essentially, Israel is building up Hamas in Gaza and is sending in more goods such as building materials and will probably end the blockade.  At the same time, Israel is undermining Abbas and the PA and is making life better for the Palestinians.  She is encouraging commercial and industrial development in Ramallah, vastly improving Arab schools in Jerusalem, and lifting checkpoints.  She continues to provide health care in Israel to both Gazans and Palestinians.  They have never had it so good.

So while Abbas is working on the U.N., Israel is working on the ground to create a new reality.