The latest US proposal for Middle East peace envisions a Palestinian state within two years, according to Egyptian officials cited in a report Monday – a goal immediately dismissed by Israel as unrealistic.

The report came amid a flurry of shuttle diplomacy ahead of the visit soon by George Mitchell, US President Barack Obama's special envoy to the Middle East. Mr. Mitchell is expected to push for a restart of stalled talks between Israelis and Palestinians. After a disappointing 2009 the Obama Administration is expected to recommit itself to resolving a conflict that has defied diplomatic solutions for decades.

Egyptian sources gave the Cairo-based daily Al-Ahram details about the US draft proposal, according to the Israeli daily Ha'aretz. (Click here for Al-Ahram's website, in Arabic.)

As part of the plan, both Israel and the Palestinians would present written guarantees underlining their obligations prior to the completion of final-status talks, an Egyptian Foreign Ministry spokesperson told Al-Ahram.

Palestinian President Mahmoud Abbas is meeting his Egyptian counterpart, Hosni Mubarak, in the resort town of Sharm el-Sheikh on Monday to discuss Israel's latest offers to renew talks with the Palestinian Authority.

The meeting comes in the wake of Prime Minister Benjamin Netanyahu's visit to Cairo last week, where he presented some ideas for jump-starting the diplomatic process.

But the Israeli foreign minister immediately poured cold water on a two-year timetable for a peace deal, saying it was "not a realistic goal," according to Ha'aretz.

"We need to begin direct talks without committing to any timeframe." ... "In the past, timetables were set and not met and this led to violence," [Israeli Foreign Minister Avigdor] Lieberman said.

The diplomatic buzz comes as activists mark the one-year anniversary of Israel's invasion of Gaza, which left 1,400 Palestinians and 13 Israeli soldiers dead.

In recent days, the Egyptian government has opened a border crossing to the Gaza Strip, and allowed in more than a hundred foreign pro-Palestinian activists, many from France, Reuters reported.

President Obama trumpeted US re-engagement with the Israeli-Palestinian peace process shortly after taking office just under a year ago. But his diplomats' efforts bore little fruit in 2009.

One sticking point is Israeli settlements. Israel has agreed to a partial freeze of new settlement building. But the Palestinian Authority has said it wants a full freeze, including a stop to construction in disputed East Jerusalem, before it will return to the negotiating table.

(See map of the region, with Israeli settlements marked, here.)

Obama's administration drew criticism for first calling for a halt to all settlement activity, but then appearing to back off that demand by praising Israel's partial freeze. In late October, US Secretary of State Hillary Clinton called Israel's "restraint" on settlements "unprecedented," wording that caused dismay in Arab capitals, MSNBC reported, and led Palestinian President Mahmoud Abbas to threaten to quit.

In an interview in the December 2009 issue of Foreign Policy, former US President Bill Clinton said he thought there was "some chance" that the Israelis and Palestinians might be ready for a deal, because "the long-term trend lines are bad for both sides."

Right now, Hamas is kind of discredited after the Gaza operation, and yet [the Palestinian Authority] is clearly increasing [its] capacity. They are in good shape right now, but if they are not able to deliver sustained economic and political advances, that's not good for them.

The long-term trends for the Israelis are even more stark, because they will soon enough not be a majority. Then they will have to decide at that point whether they will continue to be a democracy and no longer be a Jewish state, or continue to be a Jewish state and no longer be a democracy. That's the great spur.

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