In Israel, Likud has voted against the establishment of any Palestinian state, and this is being portrayed as a major step backwards for Ariel Sharon and for peace. Perhaps I'm an eternal optimist, but I don't think this is a big deal.
First, this was not a Knesset vote. It was merely a party resolution with no force of law, allowing the party members to politically posture for their constituents without doing any real harm. This isn't even anything new, since Likud has never endorsed the idea of a Palestinian state.
Second, this seems like just another good cop-bad cop routine. Many in Europe, and some in the U.S., consider Sharon an extremist, an obstacle to peace. Now Sharon gets to point to this resolution and say, "See, I didn't support this. I'm a moderate." All those EUrocrats who fantasize about Shimon Peres coming back and making everything better now see what the consequences of ousting Sharon would really be. This strengthens Sharon's hand in dealing with the world, which strengthens his hand in dealing with the Palestinians.