After seven years, Israeli and Palestinian negotiators are talking once again. That development came at the end of 2007, a year of turmoil and transition which saw the Palestinian territories split, politically, and a renewed American-sponsored push to revive the Middle East peace process. VOA's Jim Teeple has more from our Jerusalem Bureau.

Palestinians are accustomed to violence. However, the violence that erupted in the Gaza Strip in June was unprecedented. In just a few days, Hamas militants completely overwhelmed Fatah gunmen loyal to moderate Palestinian President Mahmoud Abbas, effectively splitting the Palestinian territories in two, with Hamas in control of the Gaza Strip and Fatah running the West Bank.

Hamas and Fatah had been feuding violently since Hamas won legislative elections in early 2006. However, seeing an opportunity in the disaster, Palestinian President Mahmoud Abbas moved to reassert his authority over the Palestinians. Just days after his security forces were routed by Hamas, Mr. Abbas, dismissed a Hamas-dominated Palestinian government and swore in a new cabinet made up of independents and close allies of his Fatah movement. His moves received broad support from the Arab League, the European Union, the United States and even Israel, which signaled its willingness to re-engage with the Palestinians in peace negotiations.

Seeing an opportunity to bring both sides back to the negotiating table after a seven-year absence, U.S. Secretary of State Condoleezza Rice began an intensive round of shuttle diplomacy, telling audiences extremism was gaining in the Middle East, making a two-state solution between Israelis and Palestinians imperative.

"If the Palestinians are losing hope, especially among the young, we have a great danger before us," she said. "The prolonged experience of deprivation and humiliation can radicalize even normal people. My fear is that, if Palestinian reformers cannot deliver on the hope of an independent state, then the moderate center could collapse forever. The next generation of Palestinians could collapse forever. The next generation of Palestinians could become lost souls of unbridled extremism."

In Israel, Prime Minister Ehud Olmert could do little but watch, as Hamas and Fatah battled each other in Gaza. Beset by political scandal, a public angry with his performance during the 2006 Israeli-Lebanon War and a fractious coalition government, Mr. Olmert seemed an unlikely partner for any peace initiative. However when former Prime Minister Ehud Barak joined his cabinet as head of the Labor Party, Mr. Olmert was assured of at least short-term political stability. With Mahmoud Abbas freed from his Hamas-dominated Palestinian government, Mr. Olmert agreed with Condoleezza Rice that conditions were right for a revival of the peace process.

Israeli policy analyst Gidi Grinstein, who heads the Reut Institute, says peace efforts can sometimes get a boost in Israel, when Israeli leaders are politically weak.

"Every Israeli prime minister has one major move to make with the Palestinians. The moment he or she begins to embark on that process their coalition breaks down and they basically lose power," said Grinstein. "So, prime ministers in Israel have to choose between political stability with immobility with the Palestinians, or making progress with the Palestinians and losing the political stability. This is why Israeli prime minister usually go for the political move with the Palestinians usually toward the end of their political tenure."

After more shuttle diplomacy from Condoleezza Rice, the two sides agreed to meet in November, at the U.S. Naval Academy in Annapolis, Maryland. It was the first peace conference between the Israelis and the Palestinians in seven years. Difficulties soon emerged. Palestinians wanted detailed discussions about core issues, such as borders, the future of Jerusalem and the issue of refugees. Israelis said there should be broad discussions at Annapolis and that detailed core-issue talks should follow. In the end, both sides agreed to resume regular peace talks and to reach a peace agreement by the end of 2008.

Prime Minister Ehud Olmert's spokesman Mark Regev says Israel is once again committed to the peace process.

"I believe that, with this determination by the Israeli government together with the determination of the Palestinian government, we can really move forward. There is a moment of opportunity," he said. "We cannot let that moment be wasted."

Although the Annapolis conference ended on a note of optimism, polls showed that, although Palestinians and Israelis support the peace process, neither expected much to come from the talks. Israeli officials said they wanted a firm pledge from Mr. Abbas to crack down on Palestinian militants, while Palestinian negotiators said they wanted to ease restrictions on Palestinian lives.

"Palestinians want to see results on the ground, basically. We have more than 500 checkpoints in the West Bank; the cantonization of the West Bank," said Ali Jarbawi, who teaches political science at Bir Zeit University, in the West Bank.  "The movement is extremely difficult for ordinary Palestinians. The trade and economic situation is worsening, so they need to see a lifting of checkpoints and the economic situation needs to improve in order for them to believe in the negotiation process."

The atmosphere got worse. An Israeli announcement of 300 new homes in an Arab East Jerusalem neighborhood angered Palestinians. An upsurge in Palestinian rocket fire from the Gaza Strip into southern Israel by Palestinian militants opposed to the peace process angered the Israelis. The first formal meeting between Israeli and Palestinian negotiators since the Annapolis conference ended in acrimony, in December, with both sides accusing each of acting in bad faith on a host of issues.

Despite that, the peace process continued. Donors meeting in Paris pledged hundreds of millions of dollars in aid to the Palestinians to build up vital institutions like the Palestinian security services, so that Israeli troops will withdraw from the West Bank. And, both Israeli and Palestinian negotiators pledged to keep talking in the coming year, continuing the first peace negotiations in seven years between Israelis and Palestinians.