The United Nations has just issued a glowing report on the readiness of Palestinian institutions and capacity for statehood. The target date for concluding Israeli-Palestinian negotiations, after all, is September 2011... The Palestinians' idea has been that they'll declare statehood and get nearly all members of the UN General Assembly (and most of the UN Security Council) to endorse the move, which will go through unless the United States (or France, or the United Kingdom) vetoes it as one of the "P-5" permanent members of the Council.
In fact, there has been significant progress in the West Bank toward building institutions, infrastructure, and rule of law. If one looks at sovereign states these days, the bar is not really that high, anyway. But then, Gaza is included as part of these calculations, which stretches credulity. When people mention "the Palestinians", they still need to specify whether that's the West Bank / Fatah / Palestinian Authority Palestinians, or the Gaza/Hamas Palestinians -- the nation-builders or the tunnel-diggers with rocket launchers. And there may as well be a competition to see which negotiation track is more tenuous -- Palestinian-Israeli or Fatah-Hamas.
The Arab League strategy has been to play the Israeli-Palestinian track as a justification for declaring a state -- if negotiations work out, great; if they fail, even better, since the Palestinians can then show they tried but the Israelis were unwilling. As long as Israel keeps expanding settlements, the Palestinians get a free pass.
The Netanyahu strategy has been to avoid meaningful negotiations with the Palestinians, and if the Palestinians use settlements as their excuse, the current Israeli government sees that as a win-win. Does anyone really, seriously, believe that Benjamin Netanyahu and his coalition would ever sign off on a Palestinian state under terms remotely acceptable to a majority of Palestinians? Better for Netanyahu not to reach that crossroads. As long as Hamas and Fatah are at odds, Israel can justifiably question whether negotiations with the Fatah-based Mahmoud Abbas are credible. If Hamas and Fatah do patch up their differences, and even if Hamas somehow gets with the program, Netanyahu gains one more excuse for avoiding negotiations.
And remember, UN support for statehood would be prejudicial against Israeli claims, but without compelling Israel to cede land and without any guarantee of success to what is currently a failed pre-state.
The one wild card is the pending indictment against Foreign Minister Avigdor Lieberman, whose nationalistic Yisrael Beiteinu Party makes Netanyahu look moderate. If Lieberman has to resign, Netanyahu could turn around and replace his faction with Tzipi Livni's Kadima Party, but he still doesn't need her dwindling votes to stay in power. But if she were in the coalition, together with left-wing 'party of one' Defense Minister Ehud Barak, Livni could help force Netanyahu into a position where it's nearly impossible to turn down a U.S.-brokered accord on Palestinian statehood. The details are all known and understood -- land swaps up and down the pre-1967 Green Line, overall Israeli military dominance, open arrangements around Jerusalem's Temple Mount, etc.
With the whole Middle East seeming to transform itself, it's hard to imagine what kind of dramatic gesture could change Israeli and Palestinian calculations the way Sadat's visit to Israel did three decades ago. Everything is known, and everything has been done, from Arafat and Rabin at the White House, to Abbas addressing Jewish audiences. By the time the rains return to the Jerusalem hills, the September deadline will have passed and the Palestinians will have seized their moment, or not. But the prospect of a substantive bilateral agreement between now and then has no conceivable basis in reality.