"Every day I see Israel expanding its relations with the international community, and what is more important - we are seeing more and more contacts with the Arab world," Israeli government spokesman Mark Regev told DW. "Israel received some 20 percent this year of all global investments in cyber security."

"I am not at all at ease," said Diana Buttu, a Ramallah-based analyst and former legal advisor to the Palestinian Liberation Organization. "Our younger generation is fed up. They don't see prospects for the future, or that anything is going to change in the next generation."

Peace talks collapsed last year. In the shadow of the stalemated peace process, violence has erupted. Since mid-September Palestinians have killed 20 Israelis in stabbings, shootings and vehicular attacks, while Israelis have killed at least 129 Palestinians, including 81 said by Israel to be assailants.

Israel blames Palestinian leaders for incitement to violence; Palestinians say the attacks stem from despair of achieving independence from Israeli military rule.

Israeli rule in the West Bank has become more entrenched in the last year. In March, the ruling Likud party trounced the opposition in national elections, garnering 30 seats in Israel's parliament. Prime Minister Benjamin Netanyahu, now in his fourth term, swore in a hardline coalition of settlement supporters and ultra-Orthodox parties. His government has continued building settlements. In mid-December, the Jerusalem municipality approved 891 new housing units in Gilo, a Jewish neighborhood in east Jerusalem.

Miri Maoz Ovadia, a spokesman for the umbrella settler group Yesha Council, says the settlement project is thriving. This year 600,000 settlers have been living in the West Bank and east Jerusalem, areas Israel captured from Jordan in 1967 and which Palestinians eye for a future state.

"Not only do we have a large growth rate, but we also have higher average births per family," said Maoz-Ovadia. "The Israelis have been living here for generations. These numbers are irreversible."

'A good year - but only in comparison'

Among Palestinians, the sense of frustration with Israeli rule is matched by infuriation with their own leadership. Palestinian Authority president Mahmoud Abbas has stayed in office despite his term expiring in 2009, Buttu said. Rather than cultivate a successor, Abbas, 81, has ousted rivals, cracked down on dissidents and all but ensured a chaotic transition after he leaves office or passes away, she said. A poll released this month by the Palestinian Center for Policy and Survey Research found that 65 percent of Palestinians believe the leader should resign.

Political scientist Mukhaimer Abusaada of the Gaza Strip's Al-Azhar University said 2015 was actually a good year - but only by comparison with others. There were no wars, he noted, which was a reprieve after the damaging 50-day battle between Israel and Hamas in summer 2014. And Abusaada, 51, managed to leave Gaza twice for travel to Europe - a rarity for most residents of the area.

On the larger scale, Abusaada said the violent Hamas takeover of Gaza in 2007, which led to a rupture between the Islamist party and the more moderate West Bank-based Fatah, has exacerbated the enclave's problems. Egypt will only open its border with Gaza if Palestinian Authority security personnel guard the crossing, which is unimaginable unless the two factions reconcile, Abusaada said. Israel will not lift its blockade of Gaza while Hamas is in power, he added. The result is an impoverished, isolated enclave where the largely young population is mired in 43 percent unemployment, according to a May World Bank report.

"It will take a miracle to see something good in Gaza in 2016," Abusaada said. "Something will have to come from God."

Israeli underground

Among liberal Israelis, the deadlocked peace process is a source of grave concern. In early December, US Secretary of State John Kerry sparked an uproar in Israel with his comment that Israel, through its prolonged rule of the West Bank, will become "a bi-national state."

Tel Aviv-based political analyst Tal Schneider said she was struck by two murders this year: In early July, an ultra-Orthodox radical fatally stabbed Shira Banki, 16, at a gay pride march in Jerusalem. Later that month, suspected Jewish extremists firebombed a home in Duma village, killing three Palestinians.

"We do see a rise of the Israeli underground," Schneider said. "We see extremists on both sides who control us."

Prime Minister Benjamin Netanyahu has sworn their will be no bi-national state. Spokesman Regev said the Palestinians are to blame for the stalemated negotiations. The Palestinians say they will not negotiate a peace process while Israel continues to build settlements.

Israeli-Palestinian conflict drops out of focus

Both Israelis and Palestinians agreed that international involvement had little impact on the reality in the Holy Land.

With the Syrian civil war grinding on into its fifth year, and Europe contending with more than a million migrants and the threat of the "Islamic State" group, the Israeli-Palestinian issue appears to have lost its position as a focal point of foreign policy.

In November, the European Union set guidelines to label products from Israeli settlements. Maoz-Ovadia of the Yesha Council said the move was "populist" and estimated the ultimate effect on Israeli West Bank businesses would be irrelevant.

Buttu, in Ramallah, pointed to the coming US elections, which would guarantee "pathetic" approach on the part of the Americans to the Israeli-Palestinian conflict.

"In terms of this current intifada, I think we're going to see it continue in the same low-grade scale, where Palestinians are the majority being killed," Buttu said. "And it's going to allow Netanyahu to do what he wants."