While it may appear that he is giving too much while receiving too little, his position remains in line with the majority popular sentiment among Palestinians in the West Bank and Gaza, Pollock said.

"People are frustrated and cynical, but at the same time they see no better alternative," he said.

Abbas, if he chooses to, can ride this out and find a plausible reason to stick with the negotiations, which is the best way in the medium term to limit settlement activity, Pollock said.

Meanwhile, there is speculation about a shake-up within Netanyahu's coalition government. Some believe that he may explore the possibility of creating a more moderate coalition.

Stakes are high

The talks, which had been stalled for nearly two years, picked up again in Washington earlier this month. While both sides said peace was possible, skeptics noted that several U.S. administrations over many years have attempted to broker a peace deal and all have ultimately failed.

The stakes are high for the negotiations, not only for the two sides directly involved but for the United States and other countries which are targets of radical Islam, as militants have exploited the conflict to spread their message.

Speaking Sunday on ABC's "This Week," Jordanian Queen Rania Al Abdullah said: "I'm not saying that the Middle East problem, the Israeli-Palestinian issue, is the one that created religious extremism. Religious extremism would have existed anyway. But extremists have done a... good job of using this cause to amplify their message, you know, to try to reach the masses."

Many are skeptical

Critics, however, have voiced doubts over whether the Obama administration can shepherd the two sides to a peace deal within the span of one year -- the timeline proposed by the administration.

Skeptics have billed the one-year deadline as too ambitious, noted the rift in the Palestinian leadership, and argued that the two sides are only in talks to please Washington and not committed to the process.

Other critics have argued that the Second Intifada of 2001-2003 -- a period of intense Israeli-Palestinian violence -- killed not only thousands on both sides but also caused many to cast a doubtful eye on the possibility of peace.