David Makovsky, director of the Washington Institute's Project on the Middle East Peace Process, recently teamed up with Dennis Ross, now one of Obama's Middle East gurus, to figure out why the U.S. has consistently failed to broker peace in the Middle East (Dennis was there, after all). Their book, Myths, Illusions and Peace: Finding a New Direction for America in the Middle East, argues that America's strategies have been based on false assumptions and premises about the Arab world, making lasting agreements impossible. I interviewed Makovsky about the book and discovered that as chaotic and messy as things seem now, the real showdown has not even begun.

Jeffrey Goldberg: Has the administration gone down a dead-end alleyway by having so much emphasis in the early days on settlement growth?

David Makovsky: I think the administration is using an ax when it could use a scalpel. The fact is that there was a basic baseline understanding that Israel would not expand settlements. The administration felt that even if the agreement existed, it was insufficient, and that what you needed really was a more kind of undifferentiated freeze of settlements. It seems like in [the administration's] pursuit of the perfect, this has proven to be far more elusive than the administration would have hoped.

JG: I'll give you two broad developments and just frame them in the current negotiations: the negative development, of course, is that Iran continues its pursuit of nuclear capability. The positive development is that in the West Bank, you have, I would say, the first Palestinian leadership in Palestinian history to truly fight terrorism, to truly care about the daily lives of their people.

DM: The irony is that while U.S.-Israel relations is going through a period of considerable strain, Israeli-Palestinian relations are probably better than they've been in many, many years. I think events on the ground are the most encouraging dimension, and I only wish that the U.S.-Israel piece of this would catch up to it in a way that would say enough with the diminishing returns; let's get on with the main event.

JG: If you didn't have Iran sitting there, making the move toward nuclearization, you'd have this positive development in the West Bank, you'd still have Hamas and Gaza, but it'd be weaker because you wouldn't have Iran.

DM: I'm concerned that the strain between the U.S. and Israel over settlements is going to bleed into the U.S.-Israel relationship on Iran. If there's a lot of bruised feelings here, will this have an impact on the highest level of being able to work together on the main event? We need to maintain a sense of proportion and we should reach a pragmatic conclusion, which is, on the settlements, doable: No expansions. You can monitor that --that means no extra land, that can be prejudged negotiations, but keep the good relations for this main event, which is, if the U.S. and Israel don't work together in this Iran crisis, it is more likely Israel will strike out on its own. To the Administration's credit now, I think now they're making a real effort to keep Israel close and keep it updated on its views on Iran.

JG: There are two things that are going on right now. One is an existential challenge to Israel, the other is not. Wouldn't you, as a negotiator, say to the prime minister, 'Look, you feel like you're in a position now that you were in of May 1967, clearly a huge threat is looming. Why don't you just give on this other issue, which is comparatively smaller, so that we can all focus together on the overarching issue?'

DM: I think that ultimately that's where Netanyahu was coming from, but he wanted something much grander. He wanted Obama to commit to striking Iran, which I don't think Obama would do even if Israel would say that it would yield Jerusalem. That's not a linkage that the U.S. wants. Part of the problem is that on the immediate issue of the Palestinians, the administration believes that a deal is very reachable and therefore this is just a bridge to that.

JG: Do you think a deal is reachable?

DM: No. I think a territorial, borders deal is achievable if you want it. But I think Netanyahu doesn't like the borders idea and feels that anything he agrees to in the short-term will be held against him if there isn't an agreement, and it'll become an open-ended precedent, so to speak. That might be something he could do for three months, but the administration wants something that's a year and that's renewable.

Look, we saw this before with the first George Bush, if two leaders aren't talking to each other, it poisons the relations over time. Bush hardly spoke to (Yitzhak) Shamir. So I tend to think each one needs the other on Iran. The U.S. needs Israel too because they don't want the Israelis going off on their own. My feeling is each side knows that but if there are these bad feelings that accumulate, what is rationally in the best interest of both sides somehow won't materialize that way.

JG: Avigdor Lieberman, the foreign minister -- what does it mean if he goes because of the criminal charges that might be filed against him?

DM: My understanding is that he'll name someone else from the party to his position so that the party remains in the coalition. I don't think it means a lot because the fact is that what is happening is you're having other players today, like Ehud Barak, doing a lot of the settlement negotiations with (George) Mitchell. He's sidelined already and therefore I don't think his indictment is going to be decisive.

JG: Does Obama need to do a better job communicating to Israelis, as Aluf Benn suggested, and to American Jews as well?

DM: Absolutely. This is a President with very formidable communication skills, and he needs to reach out. The question is always,if you feel the issue isn't about communication, it's about policy, maybe there's a way that you could explain your policies in a way that people could understand, but it is certainly feeding criticism of the President that he hasn't reached out. And I think he just doesn't want to do it during this impasse over the settlements because he feels it looks defensive.

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