"Until ten days ago Mahmoud Abbas appeared to have the initiative," she said.

Now, Hamas looks like it has the lead and, she added, "You can't marginalize Hamas anymore."

Palestinian internal divisions, however, are making what Clinton calls a "durable outcome" unlikely - at least for now.

"Can the Palestinians unite in order to be able to get to Phase Three?" asked Wright. "They haven't been able to do it so far."