To encourage Palestinian unity, Arab and western countries should make additional aid conditional on moe Hamas-Fatah co-operation.
Facing points of no return, Arab states have a responsibility
During the next few months, Arab states will have their hands full with problems requiring urgent attention. Chief among them will be the crises in Syria and Palestine, both of which are fast approaching their respective points of no return. Instead of acting as spectators, or waiting for the United Nations or the United States to provide solutions, Arab states could take collective action to make a difference.
The tragedy of Syria will be front and centre, with both the regime and opposition appearing determined to fight to the death. The warning of the UN envoy, Lakhdar Brahimi, should be heeded. If no political solution is found, the situation will only worsen.
With the regime becoming increasingly desperate, and the opposition better armed but unable to control some its elements, the future promises only more casualties and deepening sectarian animosity.
Mr Brahimi has offered a plan that moves the government away from single-party domination. Moscow has the responsibility for bringing the regime to the table; key Arab states should assume the parallel responsibility of pressing the opposition to agree to a peaceful transition.
Opposition leaders have so far refused to consider negotiations or compromise. While their anger towards and distrust of the Assad government is understandable, holding out for a decisive win is neither responsible nor a politically sound strategy. Given the divided Syrian polity, compromise and a transitional approach appear to be the wisest path.
The solution envisioned by Mr Brahimi won't provide a clear-cut victory for any side, but it would end the bloodletting and pave the way for a political solution that could end the authoritarian rule of the Assad family.
Arab states have leverage since they are funding, arming and otherwise supporting the opposition. Instead of merely enabling more conflict, Arab states should use that leverage to take the lead to end the killing before the country collapses and fragments, or more violence spills over borders.
Compromise is never easy and success would not be guaranteed. But it would be the least-horrible outcome to a terrible two-year war that can only get worse. Only Arabs can provide the leadership necessary for compromise.
Another area where Arab leaders must play a supportive role is to achieve an Israeli-Palestinian peace.
Palestinians remain in disarray, with leaders in the West Bank and Gaza physically and ideologically divided. Gaza, under the control of Hamas, continues to be strangled by an oppressive blockade. The West Bank is being slowly carved apart by never-ending settlement growth, hundreds of intrusive and humiliating checkpoints, and the separation wall that is snaking through Palestinian lands.
The failures of Palestinian leaders on both sides are self-evident. Hamas has made a religion of "resistance" that has won nothing but death and hardship for Palestinians and insecurity for Israel, while reinforcing hard-line Israeli policies. Meanwhile, the Palestinian Authority's commitment to diplomacy and negotiations, while commendable, has become pointless, since negotiating without leverage is an empty exercise.
Meanwhile, the hard-line Israeli government continues to expand settlements and torment Palestinians under its control. The far-right in Israel has come to define the country's politics, while the "peace camp" flounders.
If this dynamic remains unchecked, one of two outcomes may occur: either Israel will complete its plan for the domination of the West Bank and the transformation of Jerusalem - making separation into two states impossible - or there will be renewed violence with devastating consequences for Palestinians.
The first priority must be to achieve reconciliation, and the establishment of a unified Palestinian government that commands popular support and the respect of the international community.
Clearly what both the West Bank and Gaza need are job creation, infrastructure and capacity-building projects, and immediate relief. Arab states already subsidise the Palestinian Authority, and individual Arab states finance projects in both Palestinian territories. But these funds, given in this way, underwrite the divided Palestinian sides, maintaining an unacceptable status quo.
To move reconciliation forward, I propose a multi-billion-dollar "peace and reconciliation incentive fund" that would provide immediate relief and job-creating investment if the parties agreed to and implemented a unity plan.
The Arab League, instead of merely reaffirming the 2002 peace initiative, should also be more specific, spelling out the types of investment and trade incentives that would accompany a final peace with Israel.
If Arab leaders were then to go on the road selling their plan to global public opinion, it would have a tremendous effect on the peace process, not to mention perceptions about Arab states.
Promoting a peaceful transition in Syria, Palestinian reconciliation and a comprehensive Middle East peace will not be easy. Leadership never is.
James Zogby is the president of the Arab American Institute
On Twitter: @aaiusa