The big powers that have taken a strong interest in the conflict between the Israelis and Palestinians have a problem. Fixed points in the political landscape have changed, and their policies are not keeping up.
The so-called Quartet, of the US, EU, Russia and the UN, is meeting in New York on 9 May.
It still has not found an adequate response to the election victory back in January of Hamas, the main Palestinian Islamist group.
The problem is that the EU especially, but also the Americans and other big foreign donors, have for years been bankrolling the Palestinian Authority (PA), which runs some of the internal affairs in the occupied territories.
Without foreign donations the PA cannot do the most basic things, like pay its staff, let alone address the desperate economic and social problems faced in the territories, many of which have been caused by nearly 40 years of military occupation by Israel.
But once Hamas took power, the money supply was, by and large, turned off. Hamas has been told that it won't be turned on again until it recognises Israel.
Isolating Hamas
Isolating Hamas is a policy that comes logically from the US and the EU's categorisation of it as a terrorist organisation. The Russians, though, are in contact with Hamas.
The problem is that cutting off money to a PA run by Hamas also empties the wallets of Palestinians as a whole, because the authority is by far the biggest employer.
The PA has had plenty of criticism since it was established as a government-in-waiting for a state-in-waiting more than 10 years ago, at the high point of hopes for peace between the Palestinians and Israel.
But one thing it has done is to distribute foreign aid as salaries to tens of thousands of soldiers, police, civil servants, maintenance people, builders and all the others that it employs.
It has been a massive job creation scheme. Without the foreign money - and the salaries it pays - what is left of the Palestinian economy is collapsing.
The World Bank estimates that it will shrink in 2006 by 27%.
By 2008, it projects that 74% of Palestinians will be below the poverty line and 47% will be without a job.
Conundrum
The irony is that the US and the EU are very well aware of the grave political and economic consequences of their decision to turn off the money tap.
The PA is already fragile. If it can't pay its people, it could implode, or shrink to a point where its existence is more symbolic than anything else.
That will not make the territories, which are already worryingly unstable, any less violent.
So this is the conundrum: the big donors say that they want to isolate Hamas and pressure it to change its political positions, some of which, though not all, are backed by a majority of the Palestinians in what the EU declared were free elections.
But they also say that they do not want to hurt the Palestinian people.
US hard line
Attempts to find a way through it all are failing.
The US has taken a very hard line. It is, for example, not prepared to turn a blind eye to an Arab League plan to pay money direct into the bank accounts of Palestinian employees of the PA.
The Arab League can do what it likes, but the international banks it might use for the scheme are wide open to American retaliation.
Within the Quartet there are differences. The Russians have met Hamas.
Some European countries are prepared to be more flexible.
But for now, they are following Washington's much more muscular approach, even though it makes some of them uncomfortable.
The Americans' close relationship with Israel, and the importance of the ‘war of terror’ on its list of priorities, means that it is not likely suddenly to change its view.
It believes that maintaining its hard line will either persuade Hamas to do as it is told, or cause Palestinians to look for a new government.
When the Quartet meets in New York next week, it faces a hard choice.
Either it can continue to isolate Hamas, and hurt ordinary Palestinians - a majority of whom still say that if they get a state they are happy to see it standing alongside Israel - or it can do more for the Palestinians, even if it means talking to Hamas.
In the short term, don't expect much that is new. But longer term, if the objective remains the peaceful establishment of a Palestinian state, the current approach is not sustainable.
ECONOMY IN CRISIS
World Bank estimates economy will shrink by 27% in 2006, 74% will be below the poverty line and 47% unemployed by 2008
$116m: PA's monthly wage bill
PA employs 165,000 people
25% of people in West Bank and Gaza depend on PA wages