As Israel stumbles to limit the fallout from its foolish, violent handling of the Gaza flotilla incident, a larger question is what the fiasco means for the United States in the Middle East. Beyond the negative impact on peace negotiations, Washington must determine how to defend its interests amid the current transmutations in the region. The “peace process” is very nearly dead. It’s almost impossible to imagine that Israelis and Palestinians will conclude a settlement in the foreseeable future, and the problem goes beyond the negotiators on each side. The obstacles are structural: There is no will or trust in Israel to make the concessions a settlement requires, and Prime Minister Benjamin Netanyahu will not jeopardize his coalition to pursue an uncertain peace. And Hamas has the ability to undermine any agreement with Israel reached by the Palestinian Authority, while the Arab states are too bankrupt politically to prevent this.