This is the fourth of a five-part series on Barack Obama’s Middle East. Part V, on Iran, will appear Monday.

Chances are fair to middling that a ceasefire in Gaza, ending Israel’s three-week blitzkrieg there, will take hold before Barack Obama is sworn in as president on Tuesday. But, either way, the war has pushed the Palestine issue to the very top of Obama’s agenda for first days and weeks in office. If there is any silver lining from the carnage in Gaza, it’s that Obama’s team can’t avoid the issue, even if they’d wanted to before the crisis erupted.

But in talking to Washington insiders, virtually everything about how Obama will approach the Arab-Israeli dispute seems up for grabs — or, at least, Obama’s people aren’t talking. Obama, Secretary of State-designate Hillary Clinton, and other officials have said that they won’t let the problem sit on the back burner for years, as past administrations have done. And they certainly won’t abstain from engagement altogether while giving one-sided support to Israel, as the Bush administration did, from the get-go, by isolating the PLO, refusing to meet with Yasser Arafat, supporting Israel’s bloody invasion of the West Bank, its 2006 invasion of Lebanon, and, of course, winking at the current attack on Gaza.

It isn’t clear, yet, how Obama will deal with the crisis, nor is it clear who he will appoint to manage policy. Will Obama be personally engaged in dealing with the parties, in a hands-on manner, with full presidential involvement? Will he assign the secretary of state to handle the task? Will he appoint a “special envoy” for the job? Will he simply let the assistant secretary of state and the ambassadors handle it? And who will these people be? The Israeli lobby, including the Washington Institute for Near East Policy, is promoting Dennis Ross, who works at WINEP, as a kind of super special envoy, dealing with Iran and the Middle East, but that isn’t set in stone. Daniel Kurtzer, who served as Obama’s top adviser on the Middle East during the campaign, is an orthodox Jew who was US ambassador to both Egypt and Israel, is said to be a straight-shooter who is fiercely committed to a two-state solution, and his impeccable Jewish credentials make him scary to Israeli hardliners, sources say, since they will find it a lot harder to impeach him. In any case, so far, Obama’s not tipping his hand.

In the wake of Gaza, everything is unsettled. The most likely outcome of the crisis is that hawks in Israel and radicals among the Arabs, including Islamist Hamas, will be stronger as a result of the bloodletting. Among the Palestinians, Fatah and the PLO have been weakened. That will make it a lot easier for Israel to make the tired old argument that it has no “partner for peace,” since the Palestinians are divided. Meanwhile, the Israeli elections next month may catapult Bibi Netanyahu, the ultra-Zionist radical, to power. A lot depends on how Israeli voters see the results of the Gaza war, who gets the credit (if it’s seen as a success) and who gets the blame (if it’s seen as a fiasco), and so far that seems unclear. One thing is certain, though: whoever wins the Israeli election, the result will be a coalition involving two or perhaps three of the leading Israeli parties as partners — Likud, Labor, and the center-right Kadima party led by Foreign Minister Livni — and a bunch of smaller parties of all persuasions, meaning that Israel, too, will be politically weak and without a leadership likely to be able to take the hard steps needed for a deal.

In other words, the Palestinians, too, might argue that they don’t have a “partner for peace,” either.

Everyone knows what those steps must be, and it would be useful if Obama were to state them explicitly at the start. (No one will be shocked.) They are: the partition of Jerusalem, the dismantling of West Bank settlements (including, potentially, the resettling of 300,000 Jews), a land swap to rearrange slightly the contours of the West Bank for a Palestinian state, a multi-billion dollar package to provide for the refugees’ right-of-return compensation, and the removal of the checkpoints, barriers, and blockades that have turned Gaza into a concentration camp and the destroyed the economy and the quality of life in the West Bank.

To get there, Obama will have to encourage Egypt and Saudi Arabia to use all of their considerable clout to get Fatah and Hamas to put aside their differences, get a Palestinian Authority up and running, and prepare a delegation for talks. They’ll have to finesse their disagreements, but Hamas (at least some of it) has supported a ten-year ceasefire with Israel, and the Islamist group might allow Fatah to represent it during the initial rounds of talks with the United States, Israel, and other parties to the Quartet. (Incidentally, Obama ought to invite China to make it a Quintet.) Obama can also indicate broadly that he’s willing to engage Hamas, without preconditions, although practically speaking a US-Hamas dialogue will likely require quite a few intermediate steps, and quite a few intermediaries (Egypt, Saudi Arabia, Turkey, the Europeans, etc.).

A key question involves security guarantees for Israel and for the Palestinians. Obama’s national security adviser, James L. Jones, the retired NATO commander, spent much of 2008 working on this issue, and top Palestinian negotiators have told me that they believe he might be an honest interlocutor. But Jones seems inclined to support a NATO presence in between Israel and Palestine, which is not only a bad idea but one opposed by all sides. (There might be a small role for NATO observers, though.) The issue of security guarantees is especially tough now because of the smuggling of missiles through Gaza’s border with Egypt in tunnels, and it will take some tough bargaining to come up with a workable arrangement.

But here’s the bottom line: For forty years, since the occupation began in 1967, it’s been obvious that Israel won’t relinquish those territories without a significant dollop for forceful US insistence — backed by America’s vast leverage over Israel — that it’s time for a deal. Making such a deal will cause an enormous political upheaval in Israel. The hardliners, and their co-thinkers among the Israel lobby in Washington, will cry bloody murder and wave the Holocaust’s bloody shirt. Removing the settlements on the West Bank will pit the Israeli army against an armed settlers’ movement that will take on the dimensions of a civil war in Israel. Israel’s religious parties, and some of its ultra-Zionists, will threaten to commit hara-kiri rather than see Jerusalem divided. It’s a violent storm that Obama will have to weather.

Having observed this issue for 35 years, myself, I’ve learned it’s usually a safe bet to wager against an Israel-Arab settlement. But this time, for Obama, the Arab League has backed King Abdullah’s peace plan. (Ironically, I believe Iraq is the only Arab country not to have explicitly supported the Saudi peace plan.) One thing is for sure: solving this problem will be harder, by an order of magnitude, than righting the US economy.