French Foreign Minister Alain Juppe, apparently acting on behalf of Europe's foreign policy establishment, has come out with a proposal for the launch of negotiations between Israel and the Palestinians. The plan appears to be nothing more than a fleshed out version of Obama's "Cairo II" speech proposals, meaning that the President used his recent trip to Europe to consolidate the Western world's policy on the subject.
Despite semantic differences, the US and Europe have now drifted towards an interim solution which delivers a Palestinian state on boundaries the Israelis can probably live with, with some adjustments, while deferring on the issues of Jerusalem and refugees. The indefinite postponement of emotion-laden final status issues means that Israel will formalize its sovereignty over a united Jerusalem, while the Palestinian refugee issue is allowed to lapse into irrelevance. Meanwhile, since the Palestinian leadership will not be forced to compromise on the issues of Jerusalem and refugees - in theory these will be subjects for future negotiations - they will be able to sign off on the interim treaty without losing face with their rejectionist public.
As a kicker, Europe and the US have now both adopted the default and principled Israeli position that the goal of negotiations is "two states for two peoples" - a formula which recognizes a Jewish State of Israel alongside a Palestinian homeland in a future Palestine. This is a point of considerable Palestinian resistance, while Israel's approach now enjoys near universal (and public) international support.
Add to this a limited Israeli military presence in the Jordan Valley and a demilitarized Palestinian state - both likely outcomes of final status negotiations - and what we have is essentially the plan promoted by Israeli Foreign Minister Avigdor Lieberman some months ago, when he called for a long term, interim agreement. Of course, Lieberman's proposal included a much more limited Palestinian geography, while the Europeans and Americans are attempting to spur negotiations by offering the Palestinians maximum boundaries as a starting point. However, since the actual borders will be determined by negotiations, not fiat, Israel retains the ability to make changes based on its needs.
The important point is that the concept of an interim solution which can deescalate the conflict without resolving it, an Israeli initiative based on a pragmatic assessment of reality, appears to have taken root in the international system. In the narrow sense of the politically possible, this outcome is a victory for Israeli diplomacy, even while the optimal solution would be to deny Palestinians sovereignty - and the capacity to wage war against the Jews with the resources of a state - indefinitely.
Whatever the Palestinians now do - whether they reject the French proposal or accept it - it seems fairly clear that Europe and the US are now collaborating on preempting provocative Palestinian unilateralism at the UN Security Council in September. The Palestinians can challenge this diplomatic alignment, but at the risk of losing painstakingly assembled diplomatic support, and at the cost of an extension to the status quo in the territories. As for Israel, having a Europe draw publicly closer to core Israeli policies in line with the Jewish State's national interests is a welcome sight.