This is a pretty depressing assessment by Joel Rubin at Democracy Arsenal, who just returned from the Herzliya conference in Israel (the premier security summit attended by all major Israeli politicians).

It was clear, after attending this conference, that the weight of a decade of American neoconservative failure in the Middle East had brought Israelis neither security nor peace of mind.

This situation is problematic for Israeli political elites, who are also concerned that President Obama, unlike his predecessor, will not indulge conservative Israeli politicians in their greatest self-destructive behaviors anymore, especially when it comes to resolving the Israeli-Palestinian conflict.

Compounding this dilemma is the irony that the population supports a hard-line government, despite being frustrated by the policies that it is advancing.

For example, the citizens of Tel Aviv loathe settlers, whose representatives hold sway over the Netanyahu government. While settlers hold on to their vision of maintaining control over the West Bank and the Palestinians that live there, Tel Avivis understand that they are being sucked in to their dangerous, apocalyptic views.

My Tel Aviv cousins, for example, pay more than half their income to national taxes, with a significant portion dedicated to supporting these settlers. They are infuriated by the reality that they are subsidizing the lifestyle of a group of people that has no interest in resolving the Israeli-Palestinian conflict through a two-state solution, relegating Israelis to unending conflict.

Worse, while the people of Tel Aviv know that the settlers are holding the country’s politics hostage, they have no idea how to change this.

As for the political elites, despite repeated calls at Herzliya by prominent Israeli politicians, such as Tzipi Livni, Ehud Barak, Shaul Mofaz and Dan Meridor, for a two-state solution, it is becoming clear that the Israeli political system is incapable of getting there.

Compounding this dysfunction, there is a fear in Israel that the United States is a waning power. Israelis have thrown in their lot with America, and they are now beginning to worry about whether the U.S. will still be able to carry them on its back.

I left feeling that I had never seen such a demoralized Israel. Both the elites and the population looked tired, frustrated and uncertain.

It should be noted that right now there isn’t an active intifada, there aren’t missiles raining down on Israeli towns, or any other active security threat right now. It’s as quiet as it has ever been, with the Palestinians more focused on internal affairs (like Hamas policing the Gaza Strip against Al Qaeda operatives) and Israel more obsessed with Iran.

I think that we are passing through an inflection point here. It’s quite possible that 5 years from now we will look back at the winter of 2008-1009 and realize that was when the two-state solution died quietly in its sleep.