With peace talks stalled, Israelis and Palestinians are quietly — and separately — looking for alternatives.

The scenarios range from the Palestinians going around Israel to seek world recognition for an independent state to Israel pushing for a scaled-down agreement that sidesteps the toughest issues, like sharing Jerusalem and the fate of Palestinian refugees.

The thinking is that few people believe a full peace deal within a year is achievable. And the impasse that has emerged over settlement construction has brought a difficult question to the surface: If the United States cannot compel Israel to extend a settlement freeze for a few months, how can the U.S. persuade Israel to make wrenching decisions over control of Jerusalem?

Both sides claim their first choice is still a full agreement, and the Obama administration is clinging to the hope that the peace talks will succeed.

But Secretary of State Hillary Rodham Clinton acknowledged in a speech to Palestinian Americans on Wednesday that it's a struggle.

"I cannot stand here tonight and tell you there is some magic formula that I have discovered that will break through the current impasse," she said.

Palestinians say the current situation cannot drag on indefinitely: they have a measure of self-rule in the main cities of the West Bank, but Israel controls the land in between and remains ultimately in charge, controlling the Palestinians through a complex permit system. The Gaza Strip, meanwhile, has essentially broken off — an isolated statelet run by the Islamic militant group Hamas, which rejects the peace talks.