The Arab-Israeli peace process has reached a point of no return. Structural as well as ideological obstacles remain to a comprehensive Middle East peace–including major asymmetries between the parties. The two most critical challenges concern violent opposition in the Muslim world and Israel to the peace process and continuing instability in the Persian Gulf. Until Iraq and Iran are reintegrated into a more stable Gulf security system, their behavior poses a constant threat to the region and undermines the potential benefits of an Arab-Israeli peace. The study reviews the progress made toward peace between 1991 and 1995 and the dramatic setbacks that occurred in 1996. It also assesses the challenges ahead and provides a country-by-country analysis of criticisms of the peace process.