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Shortly after the Annapolis Summit, Nabil Fahmy, former Egyptian ambassador to the U.S., was invited to a farewell meeting at the White House. President George W. Bush was in a jovial mood. "Condi [former secretary of state Condoleezza Rice] and I are very optimistic about the peace process," the president said, "but Elliot [Abrams] is quite pessimistic." The veteran Egyptian diplomat turned to look at Abrams, at the time charged with the Middle East portfolio at the National Security Council. "Unfortunately," he said, "this is the first time that I am in agreement with Elliot." Even then, Fahmy recognized that Bush had no intention of doing anything besides making declarations.

Now Abrams is recommending that President Barack Obama's administration learn a lesson from the outlook that led to the "failed Annapolis process." The former adviser proposes that the two-state vision be replaced with "realism": reforming security, governmental and security aspects of the conflict. Abrams is even presenting outgoing Palestinian Prime Minister Salam Fayyad, the same person who resigned Saturday, as a "reliable partner" in his policy of realism.

Were it not for the uncanny similarity between the "realism" of American neo-conservatives and the "economic peace" of Israel's next prime minister, it would have been possible to dismiss Abrams' statements as a rude slap in Bush's face. In the latest issue of the journal Tchelet, MK Moshe Ya'alon of Likud proposes that the urgency of an immediate solution to the Israeli-Palestinian conflict be put aside in favor of a more practical approach, focused on conflict management. Benjamin Netanyahu's defense minister-designate is basing his paradigm on "the understanding that Israeli statesmen have missed so far." Ya'alon bases his argument on Dr. Guy Bechor, an expert on Arab law, who concluded that in our geopolitical space "reality creates agreements, not the other way around."

Netanyahu's government will find a loyal partner in the conflict management approach: For more than three years, since its victory in the Palestinian Legislative Council, Hamas has repeatedly suggested Israel give up the illusion of resolving the conflict in favor of managing it.

Khaled Meshal, like Netanyahu, rejected Mahmoud Abbas' demand to include the principle of two states for two peoples in the policy statement of a Palestinian unity government. The Hamas ministers will be happy to speak with Netanyahu's government about establishing industrial parks on the border areas, and they will even be happy to sign a hudna (cease-fire agreement) for 10 years or more. Meanwhile, the demographics will have their say.

Moreover, successful management of the conflict is incongruous with creating new facts on the ground, and which exacerbate the conflict and make its resolution difficult.

Will Netanyahu, the manager, agree to put settlement expansion in the West Bank on hold, and contain the assault of the extreme right on particularly sensitive sites in Jerusalem's Old City? Is manager Ya'alon willing to fight the Israel Defense Forces and the Shin Bet security service, which are blocking proper management of the conflict, such as the establishment of a children's hospital on the border? What kind of "realistic" businessman would invest money in industries in the occupied territories, whose future is uncertain?

When he was at the height of his efforts to woo Tzipi Livni, Netanyahu refused to commit to ever "give" the Palestinians their own state. Contrary to Hamas, which proposes that Fatah continue negotiations and bring any agreement to a national referendum, Netanyahu is opposed to the political handling of the conflict in conjunction with confidence-building measures.

The Obama administration has two options: to stick to the principle of resolving the conflict and to prepare to go head-to-head with the Netanyahu government over the issue of a two-state solution; or to compromise on managing the conflict and to clash with the Netanyahu government over the demand that it cease settlement activity and alleviate the daily hardships of Palestinians in the territories.

These two options raise one big question: Will Obama follow the path of Bush Sr. in the process that began in Madrid, or will he slip into the shoes of Bush Jr.? Will he force Israel to choose between the peace process, a freeze on settlements, relations of trust with Washington and generous economic aid, or will he lead the conflict the way Bush Jr. did, from Sharm el-Sheikh to Annapolis and back?