Following the deadly Flotilla attack, several reports were circulated indicating that Israel will succumb to international pressure and lift the Gaza blockade. With so many deal breakers dominating the scene, I don't see this happening anytime soon for the following reasons:
1- The United States and Israel view Gaza's Hamas government as an extension of Iran. Iran could use Gaza to wage proxy war against Israel and cause unrest in the region and by extension threaten US interests.
2- Congress's strong support for Israel's policies. Some have argued, in reference to General Petraeus, that maintaining the blockade on Gaza undermines US interests in the region, therefore, the US will pressure Israel to lift it. However, soon after his testimony, Gen. Patraeus sent a letter to Gen. Ashkenazi, IDF chief of staff, explaining how he did not link Israel's actions to the safety of US troops in the region. Meanwhile, in a letter to Secretary Clinton, almost 300 members of Congress signed on to a declaration reaffirming their commitment to the "unbreakable bond that exists between the United States and Israel. With Congress's unflinching support, no administration will ever pressure Israel into lifting the blockade.
3- Hamas is not able to meet the US and Israel's requirements for lifting the blockade. Hamas receives substantial aid in money and training from Iran, and in return lets Iran meddle in Palestinian politics. Iran approves and vetoes any deal that Hamas makes with either Fatah or Israel and the US, thereby linking Hamas's fate directly to that of Iran.
4- Iran's defying actions towards the United States and Israel is not likely to be rewarded. Lifting the blockade will be seen by the world as a reward to Iran.
5- Arab power play is not in favor of national Palestinian reconciliation. Syria does not want to give Egypt the credit for reconciliation between Hamas and Fatah. A senior Palestinian aide told me "Assad told Abu Mazen in front of me, bring Fatah to Damascus and I will have Hamas sign the document. It will not be done in Cairo."
6- Leaving an Israeli soldier in Hamas' captivity and lifting the blockade is not a likely scenario. Without Shalit's release, no Israeli politician will agree to pay the political price for lifting the blockade.
7- Although Fatah denies supporting a blockade on Gaza, they privately support a blockade on Hamas. Hamas and Fatah cannot agree and will not agree as long as there is a dispute between Iran, the United States and Israel. Both have to take into consideration their allies' and supporters' interests.
What should we expect? At most an easing of the blockade where Israel will produce a list of banned items where everything else that is not on the list is allowed to enter Gaza.