SECRETARY OF STATE John F. Kerry’s quixotic attempt to broker a final peace accord between Israelis and Palestinians stumbled to an end last week — or at least “a pause,” as Mr. Kerry put it. The secretary’s intense focus on trying to wring compromise from Israeli and Palestinian leaders well known for their recalcitrance never made much sense; his energies would be much better spent developing workable strategies for the civil war in Syria, the growing threat of al-Qaeda in the region and Egypt’s reversion to dictatorship, not to mention troubles in other parts of the world.

The failure of the latest “peace process” nevertheless raises questions about what will follow it — and there are plenty of bad options. Heading them off and finding ways to lay the groundwork for an eventual Palestinian state is a necessary sequel to Mr. Kerry’s surrender.

One challenge comes from Palestinian Authority President Mahmoud Abbas, who has launched yet another reconciliation initiative with the Islamic Hamas movement. In theory a Palestinian accord that overcomes the split between the West Bank and Gaza Strip while providing for democratic elections could be a positive development, but the numerous “unity” plans announced in the past have foundered because of Hamas’s refusal to recognize Israel or renounce terrorism.

Since Hamas is unlikely to fundamentally change its stance, a Palestinian agreement might lead to the termination of Israeli and U.S. funding for the West Bank-based Palestinian Authority and for security forces whose close cooperation with Israel has helped keep the peace. Already, members of Congress, including Sen. Rand Paul (R-Ky.), are proposing to cut or eliminate U.S. aid to the Palestinians, a step that could hurt Israel’s security more than it punishes Mr. Abbas and his cronies.

Israeli Prime Minister Benjamin Netanyahu has been trying to pressure Mr. Abbas not to go forward with Hamas, but his public jawboning probably doesn’t help. Israeli politicians are meanwhile proposing ideas such as the unilateral annexation of parts of the West Bank, a move that would be as provocative as it is insubstantial. For his part, Mr. Kerry has hinted at embracing one of Washington’s hoariest bad ideas, the issuance of a detailed U.S. plan for Palestinian statehood. That, too, would satisfy some partisans but lead nowhere.

Low-profile but practical measures by both Israel and the United States would be far more helpful. There is much Israel could do to free up movement in the West Bank and stimulate the Palestinian economy through the removal of checkpoints, loosening of controls on exports, and facilitation of new housing and businesses. Mr. Kerry once spoke of launching an economic development plan for the West Bank; now would be the time to see that through.

The United States should also seek to reverse the deterioration of Palestinian government that has occurred since the 79-year-old Mr. Abbas — whose term as elected president expired more than five years ago — forced out a reformist prime minister. Corruption has steadily increased, as have human rights abuses. New elections should be held, with the proviso that groups advocating violence are excluded. Palestinian statehood must be built on the foundation of working democratic institutions. The Obama administration should place that principle at the center of a new, more pragmatic policy.