The World's Matthew Bell talks with Israelis and Palestinians about hopes and disappointments of the past year in US-brokered peace processing, along with what to expect in the year ahead. In the de facto Palestinian capital of Ramallah in the West Bank, hotels and restaurants are fully booked. Every other street corner seems to have a new building going up. The security situation is probably better than at any time in the last decade. In many ways, it's been a good year, said Husam Zomlot, a spokesman for the Fatah party's international relations commission. 2010 was a Palestinian year par excellence, in terms of succeeding despite the most adverse, unprecedented situations for any nation, Zomlot said. Zomlot said the Israelis still occupy Palestinian lands in the West Bank and East Jerusalem and that situation must end. Nonetheless, Zomlot said the Palestinians and their leadership in Ramallah have turned a corner in the last year. The logic of �if they destroy, you destroy' isn't working, Zomlot explained from his office. Palestinians now, after all these years are focused on the positive energy, despite the extremely negative energy coming from their opponent. The World Bank says that actually despite all the difficult circumstances Palestinians face, they are now ready to assume full statehood. What the Palestinians are not ready to do, however, is return to the negotiating table. Palestinian president Mahmoud Abbas is still refusing to re-start direct talks with Israel unless settlement building stops. Going into 2011, the Palestinians are focusing on a different strategy. They are seeking unilateral recognition as a state from the international community. They are also reportedly seeking a resolution from the United Nations Security Council that would condemn Israeli settlement building. Israeli government spokesman Yigal Palmor said such efforts are harming the chances for peace. All these diplomatic successes that they boast now are nothing but fireworks. I mean, they make a lot of noise, they please the boys, but they vanish into thin air very quickly. If the Palestinians continue down this road, Palmor said, they will be left with nothing tangible. Palmor said direct peace talks are the only way for Israelis and Palestinians to resolve their differences. And despite the lack of progress in 2010, he said next year could provide an opportunity. There is no lack of disagreement � profound disagreement � between ourselves and the Palestinians on many core issues, Palmor said in an interview with The World. But how else will we ever solve these problems, if we don�t talk to each other? Palmor added that, direct talks are only a matter of time. But so far, the US-sponsored peace process is widely considered a failure in the region. Washington has suffered another major setback in the Middle East this year, said Israeli security expert Jonathan Rynhold of Bar Ilan University. Iran and its allies � Hezbollah, Syria and Hamas � have actually increased in power, Rynhold said. Turkey has begun to move into [Iran's] sphere and Hezbollah seems to have made enormous ground, he said. Rynhold described the Islamic militant group as the de facto ruler of Lebanon that has acquired rockets capable of hitting anywhere inside of Israel. Rynhold said the US and Israel both perceive Iran's nuclear program as a serious threat and as a result, military cooperation between the two allies has never been better than during the past year. He said the Israelis do see military force as one possible option for dealing with Iran, but it's not a great one, he said. While Israel certainly thinks that a nuclear Iran is a disaster for the region, it has to weigh up how much damage it could do to the Iranian nuclear program and given that, how much damage would Iran do to Israel in response. On both counts, Rynhold said the estimates are such that Israel is likely to let the United States continue to take the lead on dealing with Iran during 2011.

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