Stardate 20010705.2325 (On Screen): I have this fantasy of Secretary of State Colin Powell delivering a speech along the following lines: "The struggle in the Middle East between Israel and the Palestineans is ultimately not the United States' problem, and we've decided not to be involved in it any longer. While we hope that a settlement can be found which is satisfactory for both sides and which will end the bloodshed, we no longer believe that such a solution can be imposed from the outside by anyone, including the United States, as long as the two parties involved continue to be intransigent. The US has been attempting to work for a solution for more than 25 years and has made no progress at all, despite very high profile attempts in the past by both Democratic and Republican administrations. It's clear that further attempts by the US would be futile. Therefore, the US will be sending no further peace envoys to the Middle East and will no longer attempt to mediate the struggle or to apply diplomatic pressure on either side."
The best case outcome from this course of action would be for this to terrify the leaders of both sides and made them start to realize that there was no magic solution, and that they'd better both start making concessions to find a true path to peace (including the one essential step of Israel removing all "settlements" from the West Bank and Gaza).
Unfortunately, that's not the most likely result. The highest probability outcome would be a rapid ramp-up to full scale guerrilla warfare with gross atrocities committed by both sides against civilians and a massive increase in the body count, which would last on the order of ten years until both sides exhausted themselves. In other words, Israel in the 2000's would be a remake of Lebanon in the 1980's, with Tel Aviv starring as "Beirut". (discuss)