There is more to it than just Jerusalem. Israel is not willing to great sovereignty to the Palestinians. Everyone talks of a 2 state solution but does anyone really thing the PA is going to be controlling their borders and importing weapons? Then there is the issue of Palestinian right of return, the Palestinians have not been able to let this one go and the Israelis can’t grant this one since it threatens the very nature of the Jewish state.

So until the Israeli will really allow Palestinian sovereignty and the Palestinians give up the right of return and they both find some way to compromise on Jerusalem, no real progress is going to happen. Anyone want to bet on all of that happening anytime soon?