This week is gridlock week in New York City. The General Assembly of the UN is convening, Clinton's Global Initiative is convening-and while most New Yorkers have no idea why the traffic is even worse than ever, the fact is that there is a critical mass of world leaders in the borough of Manhattan, ready to talk to each other--and some of them are going to get an audience with President Bush. This morning, I met for breakfast with some Palestinian businessmen. Behind us, in the hotel dining room, were several members of the Jordanian cabinet. The cross-town traffic was at a crawl. But, our discussion over coffee--like many informal and formal talks this week--was about whether or not there could be renewed talks between Israel and the Palestinians, and the role of the U.S. There was also an interesting news article in today's New York Times about Israeli visa policy, where Palestinian businesspeople are caught in a catch 22 Israeli policy that is bent on discouraging more Palestinian settlement in the West Bank, but is especially harmful to Palestinian businesspeople, many of whom lived in the diaspora and returned to the West Bank to build a future Palestine--exactly the sort of folks Israel might want, one would think, to anchor a future state--but instead, they are finding themselves unable to work and travel because the Israeli system of granting temporary visas for travel is now culminating in Israel cutting off travel outside of the West Bank or Jerusalem after a certain number of visits. I heard about this from people I met with this summer when I was in the region, people whose livlihood depended on frequent trips between Jerusalem or Ramallah and Amman or Frankfurt or Dubai, but who were being restricted by Israeli policy, people whom Israel needs to build a viable state on its border.

As if these restrictions weren't enough-It’s tough doing business in the West Bank and Gaza. Ask any businessperson who has to contend with the shifting landscape of military roadblocks and checkpoints, problems with goods getting in and out. Increasingly, chaos and desperation are taking the reins, and there is enough blame for this to go around. The Hamas election has proven a disaster for the Palestinians, not only because of the international diplomatic and economic isolation it provoked, but also because of the continued warfare among and between Palestinians -- in the form both of fighting between Hamas and Fatah and internal violent disputes among young gangs who have no particular allegiance to anyone. (One leading PLO official told me this past summer that he thought the most dangerous situation was precisely that -- a young generation of armed men with no clear game plan except to lash out at fellow Palestinians as well as, of course, Israelis). Yet, as long as it remains the occupying power in the West Bank, much responsibility falls to Israel. As the ongoing rocket fire from Gaza into Israel’s southern periphery and the war with Hezbollah along the Lebanese border both showed, unilateral withdrawals, as Israel had done in both cases, don’t provide security for Israel or smooth transitions for the Arab inhabitants of Gaza and South Lebanon. Moreover, while the war between Israel and Hezbollah has ended, the Israeli Defense Forces continue military actions in Gaza, partly provoked by the Hamas abduction of Israeli soldier Gilad Shalit this past summer but not solely due to that kidnapping. The most devastating move was the late June IDF bombing of a Gazan power generator, knocking out 43 percent of Gaza’s power, still not fully restored.

As I highlight in a recent post on the American Prospect website,a new World Bank report issued in August reveals ongoing economic devastation in Gaza and the West Bank. “The twin goals of enhanced Israeli security and improved Palestinian movement are compatible in the near-term," said the report, "and … over a longer time period, Israeli facilitation of Palestinian economic recovery is key to the achievement of sustainable Israeli security.”

Sari Bashi of the Israeli NGO Gisha, which monitors the rights of Palestinians under Israeli occupation, echoes the World Bank account. As she told me by email this week, "Since Israel completed its disengagement plan one year ago, it has taken steps that have caused dangerous deterioration in the economic welfare of Gaza residents. It has closed the commercial crossings with Gaza to an unprecedented degree, causing, in the winter months alone, an estimated $30 million in damage to Gaza's agricultural export sector. Since June 25, 2006, Israel has closed all of Gaza's crossings to export and limited imports in ways that have repeatedly brought Gaza to the brink of a humanitarian crisis stemming from an inability to receive medicine, fuel, food, and other supplies...Israel controls the air space and territorial waters, and import by sea or air is not permitted. Since February, Israel has withheld tax revenues that it collects on behalf of the Palestinian Authority and which constitute the majority of the PA's operating budget. Combined with the withholding of aid from international donors following the election of Hamas, these steps have brought the Palestinian Authority to the brink of bankruptcy... Real income is expected to contract by one third in 2006, and the proportion of people living on less than $2/day is expected to rise to 2/3."

But there is in fact a chance for all this to change as a Palestinian unity government emerges, combining Fatah and Hamas along with several technocrats. There is real promise in this, particularly if the unity government works to keep the Finance Ministry out of Hamas's hands. Israeli leaders are receiving news of the unity government with lukewarm responses, as is the United States.

Surely the lesson to take from this summer's crises, for Israel especially, is that talking to one’s enemies often entails doing so when the timing is less than opportune. As Sever Plocker, an editorial writer at Israel’s most popular daily, Yediot Achranot, wrote recently: “Israel has proven that it has a military response to Palestinian terror. Two million hungry Palestinians do not have and cannot have such a military solution. We have to engage in dialogue now. “

If President Bush has any message this week to visiting dignitaries from Israel and the Palestinian Authority, it should be that they must begin a dialogue and that the U.S. will help foster such a dialogue. It should be, but it's unlikely....and so the gridlock continues, not just among the cars trying to get crosstown.