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The peace talks between the Israelis and the Palestinians have broken off, for how long one can't be sure. U.S. State Secretary John Kerry and the Obama Administration have much invested in trying to move forward, but can only be frustrated by the wide gap between the parties.

One explanation is that while the Palestinians are fixated on taking up issues where they were last left off, the Israelis are no longer preoccupied by this peace process. Their attention is focused on Iran, Syria, and the broader implications of the so-called "Arab Spring." Prime Minister Benjamin Netanyahu's coalition is not engaged in the peace process, and he explained his recent decision to postpone the construction of 24,000 new housing units in Jewish settlements outside the 1967 borders not because of the peace process but because he wanted to maintain international support for Israel's position on Iran.

For his part, Mr. Kerry made the toughest statement ever on settlement construction, warning Israelis of the risks of isolation, for which he was roundly condemned in the Israeli media. Palestinian negotiators then announced they were resigning, with no replacements yet appointed. Meanwhile much of the Arab media is fixated on who poisoned Yasser Arafat, after a Swiss report pointed to plutonium poisoning as a possible cause of death.

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Senior officials in Jordan express deep concern about the profound risk of moving away from the two state solution, and privately so do many in Israel and the West Bank. But the parties are far apart, and the competing narratives are no closer.

Similarly, the deep schisms within Arab societies mean that the landscape is indeed different than it was five years ago. In Lebanon, Hezbollah is more fully equipped and armed than it has ever been. Extremists in Syria make a mockery of a coherent coalition against President Bashir al-Assad, and neighbouring Jordan is bearing the weight of hundreds of thousands of refugees as it warns of the need for a more coherent and effective response to jihadi extremism. A visit to the Zatari refugee camp during a recent trip to the Middle East brings home the extent of the challenge. The UN is co-ordinating a massive humanitarian effort which Canada is supporting.

A little discussed part of the Kerry plan, the need for economic investment, and a growing recognition in public opinion in the region – including Iran – that sclerotic, bureaucratic economies need to become more open, competitive, and innovative, give rise to a glimmer of hope.

It is not a simple trajectory from stronger economies to more democratic societies. But it is certainly true that high unemployment, corruption, and inefficiency are the best friends of extremism. If international investment can start now, it will make a difference.

These problems are complicated, but even worse would be a retreat to isolationism and pretending that the risks of failure are not potentially catastrophic. States that operate outside the rule of law are breeding grounds for an extremism that knows no borders or boundaries. How to engage successfully in this challenge is perhaps the most difficult issue in international politics today, but its difficulty is no excuse for indifference.

Bob Rae is a former member of Parliament and former premier of Ontario.

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