Part of the reason Israeli Right and Bibi have started to insist that Palestine recognizes Israel as Jewish State is by doing so Israel negates the specter of rising Arab Population in Israel demanding the requisite legitimate 'say and power' in the Israeli State. In other words, 'demand to recognize Jewish State' is essentially a first step in possibly going the route of an apartheid state. Too bad when Sec. Kerry speaks that truth, and when someone clearly breaks media rules (shouldn't that reporter be prosecuted for breaking the rules of that conference?); as usual gadfly Senator Ted Cruze rides the horse...never mind his own stupidity and poor judgement in understanding politics of America. That is where American Politics has come to - those who tell the truth are derided while others continue to spin the web and utter speeches without being held accountable for their poor judgement.
On the ground, with the proposed unity government of Hamas and Fatah, everyone is going into wait and watch mode. Israel is right to suspend talks with a government which has Hamas - unless Hamas renounces violent, terrorist means and recognizes Israel's right to exist.
I doubt this unity government will come through or last long. End goal of this political exercise is to conduct elections. As elections come near, both parties will turn to cheap rhetoric at which point it will not be easy to avoid the temptation of - stridency against Israel to gain votes. Possibly again that can turn into vicious relationship between these factions or even if elections are done; how easy will it be for any of these factions or united government to keep aside inflammatory rhetoric just before the election? In other words, conducting elections would essentially 'close out' the room of compromise with Israel even though stated aim is to gain a united, legitimate 'voice' standing for whole of Palestine.
This is all in uncharted territory and status-quo will remain - by that I mean Israel continuing its settlements while Palestinians making rounds and rounds of world organization for a flicker of justice.