New atmosphere?

Israel wants to move to direct peace talks as soon as possible but it knows the Palestinians will only agree to that once Israel has demonstrated it is serious about reaching a lasting agreement.

Israel hopes its relaxation of border controls with the Gaza Strip will go a long way towards creating positive momentum. United States envoy George Mitchell saw the new arrangements up close when he visited the border on Wednesday. At the same day, the U.S. State Department expressed its satisfaction with the improvement.

"It appears that between 130 and 140 truckloads of goods are now entering Kerem Shalom crossing (daily). This compares with roughly 77 truckloads that were entering the crossing on June 20 prior to Israel's announcement of its new policy. So we continue to see that as a positive step and meaningful and tangible increase in assistance going to the people of Gaza," said department spokesman Philip Crowley.

While around two-thirds of Palestinians and Israelis remain pessimistic about the chances of a lasting peace, a new poll suggested there has been an increase in the willingness to compromise.

Around a half of both Palestinians and Israelis support the peace proposal initially discussed when Bill Clinton was the U.S. president. That represents an 11 percent increase in support for the plan, which calls for wholesale territorial compromise, according to the joint poll conducted by the Hebrew University of Jerusalem and the Palestinian Center for Policy and Survey Research.

However, despite the comparative optimism amongst the public, veteran Israeli journalist Akiva Eldar believes this is really Israel's last chance, as far as the Palestinians are concerned. In a recent conversation with senior Palestinian official Yasser Abed Rabbo, Eldar's Haaretz newspaper was told that "if we screw up this time there won"t be another time."

This might not be something that the Israeli public realizes just yet, but experts are well aware that this is a very real possibility, Eldar said Thursday.

Wait till next week

While the Barak-Fayyad meeting is being eagerly anticipated by the international media, the real decisions are more likely to fall next week when U.S. President Barack Obama hosts Israeli Prime Minister Benjamin Netanyahu, said Arye Naor, an expert on the peace process from Ben-Gurion University of the Negev in southern Israel.

"I don't think on the big level the (Barak-Fayyad) meeting is worth anything. There's only one key player here and that's the United States," said Naor.

Eldar also places far more significance on the Washington parley.

"Netanyahu's visit is going to be pretty decisive. If it ends with zero progress there may be no more chances and everything will explode," he said.

What the Barak-Fayyad talks may do is give greater impetus to Netanyahu's trip. Any progress achieved by the Israeli defense minister and his Palestinian interlocutor could give Obama the positive signal he is looking for.

Naor believes Obama is capable of bringing about a real peace agreement but the U.S. president will not want any repeat of the 2000 Camp David summit, during which the then Palestinian leader Yasser Arafat rejected the Israeli offer that had the full backing of the Clinton administration. Just months later, the second Palestinian intifada or uprising began and thousands lost their lives.