The last nail was hammered into its coffin with the take-over of the Gaza Strip this year by Hamas, which flatly rejects the idea of Palestinian and Israeli states living side by side. Rice can make the corpse twitch, but she cannot make it walk.
Faced with almost universal cynicism about her proposed Middle East peace conference in Maryland next month, she protested that "I have better things to do than invite people to Annapolis for a photo-op." Nevertheless, the suspicion lingers that this is just a last-minute legacy project to salvage President George W. Bush's reputation.
Secretary Rice insisted that this is "the most serious effort to end the conflict in many, many years" - but the wasted years are those of Bush's presidency. The last serious American attempt of this sort was at Camp David seven years ago, in the last year of Bill Clinton's presidency. That was another rushed legacy project, but it came a lot closer to success than this one will.
The "two-state solution," the basis of the Oslo deal, assumed that Israelis would settle for the four-fifths of former Palestine that was already within their legal borders and that Palestinians would settle for the remaining fifth. It was not unrealistic at the time, for Palestinians were very tired after a quarter-century of military occupation and most Israelis had concluded that they could not afford to hold down the occupied territories forever. But it never quite happened.
The Israelis could not agree among themselves on how much of the territories to give back. The Palestinians felt that they had made their final concession by recognizing Israel within its pre-1967 borders, and wanted all the conquered land back. On both sides there were also rejectionists: Israelis who felt that all of the occupied territories was Israel's inalienable heritage, and Palestinians who refused to accept the legitimacy of Israel. Time passed, patience eroded and hope died.
There is another reason, beyond sheer fatigue and disillusionment, for the collapse of the peace process. The Islamist parties and groups that are the main opposition to the existing regimes in most Arab countries have always condemned the idea of making peace with Israel. Their organizations are illegal in many countries, but their views on Israel are very popular.
In some 30 years of trying, the Islamists have not managed to win power in any Arab country, either through elections (where that is theoretically possible) or by revolution, but now they have the wind in their sails. The exploits of the Islamists who have come to dominate the anti-American insurgency in Iraq, and Hezbollah's success in withstanding the Israeli assault in southern Lebanon last year, have made them the heroes of the Arab street, and given Islamist parties everywhere a better chance of gaining power.
It has already happened in the Gaza Strip. Hamas' seizure of power there last June has effectively split the Palestinian proto-state in two - and Hamas refuses to accept the permanent division of Palestine into Jewish and Palestinian states. How can Israel do a deal with Mahmoud Abbas, president of the Palestinian Authority, when he only controls the West Bank and cannot deliver Hamas's consent to the deal?
Even those Israelis who genuinely want a deal are increasingly reluctant to hand over territory in return for peace, since they cannot be sure that the regimes they are dealing with will stay in power. What if Israel finally gave the Golan Heights back to Syria in return for a peace treaty, and then a few years later President Assad was overthrown by Islamists who repudiated the treaty and remilitarized the Golan?
Even existing peace treaties are at risk. What if the Islamists were to come to power in Egypt one day? In the 2005 election the semi-legal Muslim Brotherhood (it can run candidates in elections, but only as "independents") increased its seats in parliament fivefold, from 17 to 88, despite the usual vote-rigging, media manipulation and intimidation. One of its promises, if it was elected, was to hold an immediate referendum on the Egyptian-Israeli peace treaty of 1979. In such a referendum, Egyptians would probably vote to cancel the treaty.
It really is over. There will be no comprehensive Arab-Israeli peace deal in this decade. In the next decade, there could even be a war.
* GWYNNE DYER is a London-based independent journalist.