Natan (Anatoly) Sharansky, who was a prisoner of conscience in the Soviet Union for years and is now a minister in the Israeli Government, made the following point. You can't make peace with a dictator. There are a number of reasons, the main one being it is in his interest to keep tensions high, it justifies his harsh rule, otherwise people will turn against him. Imagine if Arafat had accepted Barak's deal at Camp David, he would have a state. However, his rule would be in peril. People would start to wonder where are all the billions of dollars that were given to the PA? Why is it that so many people are still in refugee camps? Why is it that there is no freedom etc? Instead no one in the PA will really criticize Arafat for corruption etc. because Israel is the greater enemy. The same applies to Syria. Assad could not make peace with Israel, if he did how could he justify the martial law (which has been in effect since 1963)?
There is another problem. As I have pointed out many times, PA (and Arab)incitement has been going on for years. This has completely poisoned the atmosphere.
Based on this, I don't see a near term solution. The only way things will change is when the Arab society opens up to the world and becomes more democratic.