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A masked Palestinian protester walks next to burning tyres during a weekly Friday protest against the Jewish settlement of Qadomem, near the West Bank City of Nablus April 25, 2014.

MOHAMAD TOROKMAN/REUTERS

U.S. President Barack Obama pulled back from the Middle East peace process Friday saying that maybe it was time for "a pause" in the troubled U.S.-assisted negotiations between Israel and the Palestinian Authority.

"There comes a point at which there just needs to be a pause and both sides need to look at the alternatives," he said during a news conference in Seoul.

Israel called a halt to the peace talks Thursday after Palestinian president Mahmoud Abbas's Fatah movement agreed to a unity pact to reconcile with its arch-rival, Hamas, a militant resistance group that has always opposed recognition of Israel.

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Describing Mr. Abbas's move as "unhelpful," Mr. Obama said it was "just one of a series of choices that both Israel and the Palestinians have made which are not conducive to solving this crisis."

But Israeli newspapers in their big weekend editions Friday were not full of the doom and gloom one might have expected. Rather, they were almost uniformly optimistic.

Israel Hayom, the daily paper viewed as closest to Israeli Prime Minister Benjamin Netanyahu, said that despite the rhetoric denouncing Mr. Abbas's deal with the "terrorist" Hamas, the cabinet had "decided on the suspension of the talks, not on their termination, and this is due to the intention to renew [negotiations] if the Palestinian reconciliation fails in the coming month."

Indeed, the Prime Minister's office was busy Thursday night and Friday trying to help that happen. It leaked word to several Israeli news outlets that the Palestinians had missed a great opportunity. On the night before the unity pact was announced, it said, Mr. Netanyahu had offered the Palestinians a package of incentives to extend the peace talks scheduled to end on Tuesday.

These incentives were reported to have included a renewed commitment to release a number of long-term Palestinian prisoners; an offer of a partial freeze on construction in Israeli settlements in the West Bank; and permission for Palestinians to begin wide-scale construction projects in West Bank areas under Israeli control, something the PA has long sought in order to house its growing population.

Thursday night, Israeli TV's Channel 10 reported that the Mr. Netanyahu was also prepared to begin discussions on the border of a Palestinian state. Last weekend, Mr. Abbas had made such a discussion a condition of his agreeing to extend the talks.

All this was said to have been conveyed to Palestinian negotiators as they met with their Israeli counterparts Tuesday night. By that time, however, other PA representatives were in Gaza meeting with Hamas officials in what turned out to be an all-night session. By morning, they emerged to report reconciliation between the former warring factions.

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That announcement calls for Hamas and Fatah to agree on a national consensus government of non-party people within five weeks, and to hold new elections six months later. Such deals have been made in the past and never fulfilled.

Israel was quick to denounce the deal as a pact with the devil, but Mr. Abbas and his party officials have defended it, insisting that in entering into this pact, Hamas, the group that once terrified Israelis with waves of suicide bombings and other attacks on civilians, has agreed to accept the peace process.

Fatah officials say they won't complete the reconciliation process unless Hamas agrees to a new government that accepts the two-state solution – Israel and Palestine – along the 1967 lines. They add that the new government must also adhere to the conditions of the Middle East Quartet: recognize Israel, ratify all signed agreements and renounce violence.

The Central Committee of the PLO is meeting Saturday and Sunday in Ramallah to discuss all this, as well as to begin to work out the details of how the two former adversaries will combine their security services and continue to work with Israeli forces on a daily basis.

It is the Palestinians, more than the Israelis who need a resolution of this eternal conflict. But the collapse of the negotiations for a two-state solution leaves Israel in a precarious position.

They face a newly empowered Palestinian leader who represents all Palestinians and who is determined to use his UN observer-state status to gain access to more international institutions, including possibly the international courts in which Israel could face charges.

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