I think both sides aren't serious about negotiating for peace. The Israelis are just fine with the status quo, and the Palestinians don't want to negotiate until the Israelis gives up it's settlements in the west bank, and lets Palestine control it's own borders, neither of which Israel is willing to do.
I think that for one, Hamas needs to cease their militant strikes in Israel. Period. This is not conducive for rapport with Israel, which has a population of over 5 million. The rest of Palestine has the potential for growth , in fact, humanitarian aid and invstment(s) into Palestine is highly possible. Just recently, last week, the Minister of Finance from Japan visited Abbas and talked about the possibility of increased Japanese investments into infrastructure.
In order for development to take place, there has to be a ceasefire and a working rapport between both sides without the threat of firing weapons. Israel and Palestine needs to control themselves.
Israel has to remove settlements in Palestine-controlled areas of Gaza and West Bank, this will definitely prove as a confidence building measure.
Now, the biggest problem must be addressed. Palestine , currently, does not recognize the existence of the State of Israel. I think that when Palestine does do this, and Israel allows greater integration of Palestine with Israel , increased education in Palestine, increase Israeli investments, shall this shroud of violence and mistrust be lifted.