Reflecting the considerable uncertainty brought on by Olmert's decision, Ghaith Al-Omari, advocacy director for the Washington-based American Task Force on Palestine, offered a pessimistic assessment.

"In my view, it seals the fact that there will be no conflict-ending deal by the end of this year," said Al-Omari, who was a member of the Palestinian negotiating team during the failed 2000 Camp David U.S.-backed peace-making effort.

Al-Omari said he did not think Olmert had the moral authority to negotiate a deal and said his chief negotiator and possible successor, Israeli Foreign Minister Tzipi Livni, would be unable to make concessions in a political season.

"Livni will not enter the election season with 'Dividing Jerusalem' on her banner. She cannot make the necessary compromises," he said. "We are going to get into a holding pattern on the negotiations ... I think it's politically impossible to reach a deal by the end of the year." LINK