A new U.S. intelligence report on what the world may look like in 2030 said that while an Israel-Palestinian peace agreement could have "enormously positive consequences" for the Middle East, the more probable scenario is that a Palestinian state will incrementally come into being by 2030 via "unofficial independent actions," with the core issues of the conflict remaining unresolved.

The report, "Global Trends 2030: Alternative Worlds," was issued by the National Intelligence Council, an analytical arm of the U.S. government's Office of the Director of National Intelligence. In addition to U.S. intelligence analysts, the report includes the views of foreign and private experts.

It is the fifth report of a series — the previous one was released in 2008 — that aims to stimulate "strategic thinking" among decision makers and not to predict the future. The reports intentionally coincide with presidential election years to offer insights on global trends to new administrations.

On Israel's domestic situation, the report said that the country "faces increasing political and social divisions between those who still cherish a vision harking back to its 1948 founding of a sectarian, liberal republic or an Israel characterized by the growing demographic weight of the religiously conservative haredim and settler movement."

The report said that Israel would remain the strongest military power in the Middle East, but would "face continuing threats from low intensity warfare in addition to any nuclear one from Iran."

On the conflict with the Palestinians, the report said that for Israel a permanent resolution "could open the door to regional relationships unthinkable today."

"The end of Palestinian conflict would provide a strategic setback to Iran and its resistance camp and over time undermine public support for militant groups such as Hezbollah and Hamas," the report said. "Without some sort of resolution, Israel would be increasingly absorbed with trying to control a burgeoning Palestinian population with limited political rights and a restive Gaza next door."

The report said that a Palestinian state could emerge "from Arab-Israeli exhaustion and an unwillingness of Israelis and Palestinians to engage in endless conflict."

"Issues like ‘right of return’, demilitarization and Jerusalem will not be fully resolved by 2030, and there will be no complete end of conflict," the report said. "The way forward toward a Palestinian state will be through a series of unofficial independent actions known as ‘coordinated unilateralism,’ incrementally leading to statehood."

"Palestine’s borders will be roughly along the 1967 borders with adjustments or land swaps along the Green Line, but other issues will remain unresolved."

According to the report, the potential for reconciliation between the Palestinian Authority and Hamas will increase "as Hamas moves away from Syria and Iran to the Sunni Arab fold."

The report said that the Middle East faces "a highly unstable future" if the current Islamic regime in Iran stays in power and develops nuclear weapons.

"A number of our interlocutors believe that Iran will stop short of developing a nuclear weapon — but will retain the ability to develop such a weapon," the report said. "In this scenario, a breakdown of the nonproliferation system would be inevitable."

In such a scenario, countries such as Saudi Arabia, Turkey, Egypt, the United Arab Emirates and possibly even Jordan could seek to develop their own nuclear capabilities, the report said.

"If this occurred, the region would be in constant crisis," the report said. "Sunni-Shia and Arab-Persian antagonisms would increase, spilling over to create far-reaching instability outside the region."

Another possibility, the report said, is that the Iranian regime would come "under growing pressure from its public, which could desire economic gains rather than nuclear weapons, and might not want to pay the price in terms of international isolation. Eventually, the regime could be toppled by elite infighting and mass demonstrations. Under this scenario in which Tehran focused more on economic modernization, a more pro-Western, democratic Iran — and a more stable region — would emerge."

Islamic terrorism might end by 2030, but terrorism is unlikely to disappear completely because states may use such groups due to a "strong sense of insecurity," according to the report.

"With more widespread access to lethal and disruptive technologies, individuals who are experts in such niche areas as cyber systems might sell their services to the highest bidder, including terrorists, who would focus less on causing mass casualties and more on creating widespread economic and financial disruptions."