The United States is strongly committed to Israel's security and well-being as a Jewish state. It seems clear that an agreed, just, fair, and realistic framework for a solution to the Palestinian refugee issue as part of any final status agreement will need to be found through the establishment of a Palestinian state, and the settling of Palestinian refugees there, rather than in Israel.Today, the Annapolis push seems to have placed the US more towards the Arab side, as the Secretary of State shows her pique at Israel's building in East Jerusalem.
As part of a final peace settlement, Israel must have secure and recognized borders, which should emerge from negotiations between the parties in accordance with UNSC Resolutions 242 and 338. In light of new realities on the ground, including already existing major Israeli populations centers, it is unrealistic to expect that the outcome of final status negotiations will be a full and complete return to the armistice lines of 1949, and all previous efforts to negotiate a two-state solution have reached the same conclusion. It is realistic to expect that any final status agreement will only be achieved on the basis of mutually agreed changes that reflect these realities.
At the time, it seemed that the letter hardly made up for the amount of security Israel lost as a result of the retreat from Gaza. As time goes on, the letter seems to be more and more worthless, and the folly of Israel giving up tangible national assets in exchange for empty promises continues to increase.
UPDATE: Silly me. I thought that Kadima had okayed the Har Homa buildings to show how precious Jerusalem was to the government and to send a message. Now they are saying it was all a bureaucratic mistake.