The Obama administration's approach to the Middle East is characterized by an apparent desire to revive the sunny illusions of the 1990s peace process - in an era that is far more uncertain and dangerous. This is particularly noticeable in the Israeli-Palestinian arena, in which the United States, the dominant world power, sets the parameters of debate. As a result, international discussion of the conflict is now more detached from reality than at any time in the past 40 years.

There are two layers to the edifice of unreality in which mainstream debate on the Israeli-Palestinian issue is now taking place. The first and most obvious one concerns the Hamas enclave in Gaza. It is now over four years since the movement's victory in elections to the Palestine Legislative Council, and nearly three years since the Hamas coup in Gaza. It is therefore past time to acknowledge that a single, united Palestinian national movement no longer exists.

Since this is, apparently, a reality too terrible to be admitted, the U.S. and the Europeans have chosen, in public at least, to ignore it. The fiction that the West Bank Palestinian Authority speaks in the name of all Palestinians is politely maintained. Behind the scenes, however, the reality is widely acknowledged. The intended means for coping with it constitutes the second layer of illusion.

The inability of even mainstream Fatah-style Palestinian nationalism to accept partition as the final outcome of the conflict has prevented its resolution twice - in 2000 and 2008. This type of nationalism understands the conflict as one that pits a colonial project against a native, authentic nationalism.

From such a perspective, partition of the land means admitting defeat. But Palestinian nationalism does not feel defeated. It is characterized, rather, by a deep strategic optimism. From its point of view, it is therefore not imperative to immediately conclude the struggle - but it is forbidden to end it. Hence the endless reasons why the partition deal somehow can never be inked.

The solution to this obstacle, the West has now decided, is that a new Palestinian leadership, unburdened by this outlook, must be created and defended. The manifestation of this approach is the meteoric career of Salam Fayyad, who was first imposed upon Palestinian politics as finance minister in 2002 by then-secretary of state Condoleezza Rice, and is today PA prime minister.

Fayyad is working closely with Western representatives to build up the institutions and the economic prosperity that are supposedly going to transform Palestinian political culture from the all-or-nothing logjam that has prevented conflict resolution until now, into something with which the world can do business.

The essential logic of this is the same wishful thinking that doomed the 1990s peace process: namely, the idea that institution-building and economic advancement will - and must - eventually have a transformative effect on political outlook. This idea, experience has shown, is fundamentally flawed.

Some liken Fayyad to Konrad Adenauer, the German chancellor who presided over the transformation of political culture and the emergence of democracy in his country after 1945. But Adenauer operated in an era in which the anti-modern, anti-Western element in German political culture had just experienced a final, crushing Gotterdammerung, and Germany was living under a massive and permanent occupation.

In the Palestinian territories, by contrast, the anti-Western and anti-modern element is flourishing, and has state backers in Iran and Syria. It would probably quickly consume Fayyad, were he to cease to be cradled in the arms of the West.

Like the pleasant, well-dressed leaders of the March 14 movement in Lebanon - who have now been devoured by Syria and Hezbollah - Fayyad and company are the product of Western wishful thinking. And like those of March 14, they will survive for precisely as long as the West is willing to underwrite them. And no longer.

This would be fine. The economic development Fayyad is promoting in the West Bank is wholly positive. The problem is that this fantasy version of Palestinian politics is now being seen as real in Brussels and Washington. There are those in the West who seem to have convinced themselves that their creation can walk by itself.

The pleasant figure of Fayyad allows outside observers to pretend that the underlying realities of Palestinian politics do not exist. From there, it is a short step to convincing oneself that the only reason there isn't peace in the Middle East is because Interior Minister Eli Yishai wants to build houses for ultra-Orthodox families in north-central Jerusalem.

In the case of the U.S. administration, it is not entirely clear if this view derives from genuine naivete, or a calculated rationale. There are those who suspect that President Obama will find a way to hold Israel responsible for the absence of peace, regardless of the truth of the situation, because of broader considerations that in his view require the distancing of Washington from Jerusalem.

Either way, it is difficult to discern what advantage the administration's approach will bring for Western interests and good governance in the region. The main impression to be gained is that the West and its allies are confused, disunited and fractious. A cause for celebration for their enemies, no doubt, but hardly an impression one would expect Washington to wish to promote.

Jonathan Spyer is a senior research fellow at the Global Research in International Affairs Center at the Interdisciplinary Center, Herzliya.