George Mitchell will shuttle between Jerusalem and Ramallah
Talks between Israel and the Palestinians, mediated by the United States, have been launched, resuming negotiations which have been stalled since December 2008.
The aim of the "proximity talks" is to get the two sides to resume direct discussions of the issues at the core of one of the world's most intractable conflicts, which nearly two decades of on-off talks have so far failed to solve.
What form will the talks take?
Previous talks have been face-to-face negotiations, but the new talks will be indirect.
This means the US Middle East envoy George Mitchell will shuttle between delegations from both sides, probably moving between Jerusalem and the Palestinian town of Ramallah. It is not clear how far the logistical arrangements have been discussed.
The aim is to move eventually to direct talks.
But the Palestinians have refused to hold these without a complete freeze of Israeli settlement building in the occupied West Bank.
Palestinian Authority President Mahmoud Abbas and the Arab League say they will give the talks four months before reviewing progress. Israel has imposed a 10-month slowdown in settlement building, but this is due to end in late September.
Mr Netanyahu is expected to lead a small team of negotiatiors, likely to include advisers Yitzhak Molcho, Ron Dermer and Uzi Arad. The Palestinians have not named their delegation, but it is thought likely to be headed by Mr Abbas himself, and to be limited to a small number of veteran negotiators close to him.
What do the sides want?
Mr Netanyahu says he supports a Palestinian state, but it must be demilitarised, with an Israeli presence along its eastern side, and it must recognise Israel as a Jewish state. Jerusalem, where the Palestinians want their capital, must remain Israel's eternal, undivided capital.
This is a tougher stance than that of his predecessor Ehud Olmert, but it remains unclear how far it is an initial bargaining position rather than a statement of un-crossable red lines.
The Palestinians want a viable, independent state in the West Bank and Gaza, with the capital in East Jerusalem. They want the state's territory to be based on the land that Israel occupied in 1967, but are willing to accept a partial land swap, allowing some Israeli settlement blocs to stay in Israel in exchange for territory now in Israel.
The Israelis say they want to move to direct talks as soon as possible because final status issues should be discussed face-to-face. The Palestinians want guarantees that the Israelis are willing to negotiate seriously on the big questions before they will enter direct talks.
What happened last time they talked?
Direct negotiations between Mr Olmert's government and the Palestinians broke down in December 2008, as Israel launched a major military offensive in the Gaza Strip. This coincided roughly with the end of Mr Olmert's term in office and his replacement by Mr Netanyahu, who took several months even to back publicly the concept of a Palestinian state.
During the talks, Mr Olmert and Mr Abbas's teams exchanged maps of possible border solutions, but failed to reach agreement. Mr Olmert says his offer was the most generous ever made to the Palestinians - international supervision of Jerusalem's holy sites, the symbolic return of a few thousand Palestinian refugees and, according to Haaretz newspaper, Israeli withdrawal from 93.7% of the West Bank, plus the equivalent of 5.8% of its area from Israel in a land swap.
Mr Abbas's team say they produced a map which offered to let the Israelis to keep 1.9% of the West Bank in exchange for land in Israel.
What are the chances of success?
There is little optimism from either side, with both saying they doubt the other's sincerity. There is also an obvious gulf between their positions.
As it stands, Mr Netanyahu has little room for manoeuvre as his current coalition includes strongly right-wing parties which would be opposed to even discussing the status of Jerusalem. But he does have the option of bringing the centrist Kadima party into government if he wants to make concessions.
Mr Abbas's position is weak. His democratic mandate has run out - elections are due but cannot be held because of the feud between his Fatah party and the Hamas movement.
The two factions are bitterly divided. Hamas, which controls the Gaza Strip, home to 1.5m Palestinians, is strongly opposed to the negotiations. If Mr Abbas did reach agreement with the Israelis, it would most likely be on terms Hamas would reject, although some of its leaders have suggested they might accept a deal if it was backed in a referendum.
What if the talks fail?
Leaks to US newspapers have suggested that if little or no progress is made in the proximity talks, the administration of US President Barack Obama may consider proposing its own peace plan in the autumn.
Mr Abbas says he has actually asked the Americans to "impose a solution", but the Israelis have reacted strongly against the idea.
Separately, Palestinian Prime Minister Salam Fayyad is working to build the economic and security institutions of a functional state by mid-2011. There has been speculation that this might lead to a unilateral declaration of independence by the Palestinians, although Mr Abbas has said he will not act unilaterally.
However, there are always fears that failure in the political process can lead to violence on the ground. Also, in a volatile region a conflagration between Israel and Hezbollah in Lebanon, or with Hamas in Gaza, could undermine attempts to make peace.