Both Israel and the Palestinian Authority in the West Bank have welcomed President Obama's announcement that he will "aggressively" pursue peace in the Middle East.
"It must instill in us a sense of urgency, as history shows us that strong and sustained American engagement can bridge divides and build the capacity that supports progress," he said.
Mr. Obama appointed former senator George Mitchell as Mideast envoy and said he would visit the region soon.
Danny Ayalon, a former Israeli ambassador to Washington, said Mitchell is a good choice.
"He's very much versed about the complexity of the conflict. I think as a person he is very effective in what he does. I believe he understands Israeli concerns," said Ayalon.
But many Israeli analysts believe Mitchell's appointment signals a departure from the pro-Israel policies of President Bush to a more balanced diplomacy. This was evident in Mr. Obama's comments on the Gaza war: He condemned Hamas rocket attacks and weapons smuggling, but also said that the Palestinians need a future with hope.
"It's extremely important for the president and the new administration to adopt a hands-on policy, but a hands-on policy means that they have to have an even-handed approach to peacemaking," said Palestinian legislator Hanan Ashrawi.
Despite the good will, the Obama administration faces enormous obstacles, not only because of territorial disputes between Israel and the Palestinians, but also because the Palestinians are divided among themselves. Palestinian moderates rule the West Bank, while the Islamic militants of Hamas control Gaza. Hamas rejected President Obama's criticism of weapons smuggling, saying armed resistance is a fundamental Palestinian right.