The two state solution is dead, if it was ever truly alive in the first place. The only real chance of a solution is some form of confederation with guaranteed minority rights for Jews and Palestinians. Hopefully that would open up Gaza and the West Bank for a much needed focus on economic issues rather than endless circle jerking around flegs and identiteh that only benefits a small crew of unrepresentative weirdos on both sides.
I can't see that working right now either. The only potential long-term solution that doesn't involve the destruction of the State of Israel is for Israel to stop building new settlements, stop taking more land, and hope that a decade or two of status quo will have calmed things down enough that maybe talks can resume. However, even if Israel were to do that, the chance of success is low.
Thing is, in the short-to-medium term, it is in the interest of Israeli governments to continue as they have been, which means we won't see a freeze, but the longer without a freeze the tougher it will be to get a real peace deal. Israeli governments will likely continue kicking the can down the road until they get their asses kicked.
But it'll be a while unless Israel does something real stupid like knock down the Dome of the Rock so the Temple can be rebuilt. Absent a colossal blunder like that, the Arabs likely won't get their stuff together until they run out of oil.
