Is peace with Syria likely or even possible?
A better question would be whether Syria is a worthwhile peace partner.
The answer to either question is 'no'.
Peace with Syria is not likely, nor is Syria a worthwhile peace partner.
Over the past forty years, Syria has backed several groups which have killed Americans and Israelis. Presently, Hamas is the darling of Damascus, though Hezbollah has also benefited immensely from the favours of the Alawite dictatorship.
Both groups have shown a complete disregard for civilian lives - Arabs, Israelis, and Americans have all been slaughtered opportunistically by both Hezbollah and Hamas.
Hamas, as the Palestinian branch of the Muslim brotherhood, was an unlikely candidate for the position of 'most favoured terrorist gang', given that Assad père slaughtered tens of thousands of Muslim Brotherhood members and civilians in the city of Hama to quell the Syrian branch of the Ikhwan al-Muslimin, and his son Bashar Al Assad has shown as little love for Islamic revolutionaries as his father.
[The Hama massacre (Arabic: مجزرة حماة) occurred on February 2, 1982, when the Syrian military bombarded the town of Hama in order to quell a revolt by the fundamentalist Muslim Brotherhood. An estimated 7,000 to 40,000 people were killed, including about 1,000 soldiers.
Source: http://en.wikipedia.org/wiki/Hama_massacre .
Hafez Assad's brother Rifaat Assad boasted of having killed 38,000 people, and there are estimates that over fifty thousand perished. This does not include several thousand Islamists executed by the Syrian regime before or since, in addition to other dissenters.]
REGIONAL POWER AND INFLUENCE
But, for both father and son Assad, Syria's rightful role is as a regional power, and they have shown an appetite for "Islamic" brutality outside their borders in their aim to make Syrian influence count. Hezbollah, of course, would not have stood a chance against the other factions in Lebanon were it not for Damascus, and Hezbollah in turn assisted the Alawites in crushing the aspirations of Sunni Muslims in both it's own bailiwick as well as parts of Mediterranean Syria, in addition to terrorist acts in other countries. They have proven themselves useful and loyal thugs while providing the Syrian regime with plausible deniability.
So also Hamas. For Arab regimes, the main plus-point of Hamas is that it is not the PLO, not Fatah. While little positive can actually be said about Arafat, all agree that whatever corruption existed in his network during his life, it existed only by toleration, NOT by the express design of outsiders seeking to harness so potent a terror organization for their own ends.
If Fatah did on occasion commit crimes on behalf of the Arab regimes, it did so on its own terms, and strictly for concrete benefits in return.
Hamas, on the other hand, represents an organization whose associates in places like Cairo, Damascus, Amman, and Baghdad, gratefully remember any assistance given. Consequently aid to Hamas in Gaza is repaid by Muslim Brotherhood quiescence (and even co-operation) elsewhere.
Since the mid-1990s, Hamas has been headquartered in Damascus, and operational funds have been transferred by Syria to operatives in Israel. Weapons and materiel have been smuggled by Syrian agents to Hamas via Syria and Syrian-Lebanon, as well as at times through Jordan and other Arab countries.
In return for Syrian patronage, Islamic radicals in Israel and elsewhere have softened their tone towards the Assad regime, no longer delivering denunciations and pronunciamentoes as they had during the eighties and nineties. Where previously the Islamic Brotherhood had refrained from violent actions against Israel in favour of internal struggle, now its attention is equally divided between fomenting unrest in Arab societies that are not on board with its aims, and organizing terrorism against Israel and the Western World in Gaza and the West Bank.
[There are Hamas organizers and Muslim Brotherhood cells in Europe and America. Sofar they have not made their presence much known. What their impact will eventually be can as yet not be estimated.]
MUSLIM BROTHERS IN GAZA
In the eighties the Muslim Brotherhood in Gaza (through its front the Islamic Center - Al Mujamaa al Islami) administered a large number of nominally benevolent institutions, such as schools, clinics, and food-distribution centers. After the outbreak of the intifada in 1987, Sheikh Yassin and other Muslim Brotherhood leaders decided to create a second organization that would spearhead violent action, founding the Harakat Al Muqawamah Al Islamiyya (since more commonly referred to as Hamas) in 1988.
Due to Israeli counteractions, by the early nineties most of the leadership was in custody, in hiding, or in exile.
Oslo in 1993 put Hamas at odds with most of the Palestinian political leadership, and made them the only significant group still solely devoted to terrorism for most of the nineties, during which period they received funds and supplies from Iran and Jordan.
[King Hussein and the Muslim Brotherhood in Jordan had a longstanding modus vivendi, whereby in return for support to Islamic causes, the MB would advance Hussein's influence in the West Bank and Gaza. Though Hamas activists were barred from certain activities in the Hashemite kingdom, they had a great deal of operational freedom.]
The situation changed in 1994 when Jordan signed a treaty with Israel. In mid 1995, Jordanian authorities acted against Hamas, and several leaders fled to Damascus. By 1996 it was evident that the military wing of Hamas in Damascus was preparing actions against both Israel and Jordan, and that Syrian officials were providing support to the organization. Under international pressure, Damascus imposed gag-orders on Hamas claims of responsibility for attacks and arrested several activists, then quietly released them. In the meantime, Hamas cadres had full operational freedom in Syrian-Lebanon, and with Syrian and Iranian encouragement recruited thousands of new members in the Palestinian camps.
By 1999, the remaining public figures of Hamas had established themselves in Damascus or Beirut, and the separation between the Jordanian Islamists and Hamas was complete. Since 2000 it has been clear that cells in the West Bank and Gaza take orders from Damascus.
When the Al Aqsa Intifada broke out in September 2000, Hamas (and Syria) were perfectly positioned to diminish the influence of moderates in the PLO by taking the lead in violence, and aggressively recruiting new members. As a result, many of the deadliest attacks can be ascribed to Hamas (and its paymaster Syria).
Internationally and internally, Syria wholeheartedly supported the wave of terrorism, defending the murder of Israeli civilians, praising attacks, and pressuring clerics to justify terrorism with fatwas, in addition to smuggling explosives and weapons to Hamas via Lebanon and Jordan.
THE PRESENT SITUATION
All of this has contributed greatly to peace within Syria, with only Sunni extremists from Iraq spoiling the calm by the occasional act of insane violence. The Islamic Brotherhood in Syria, in so far as it does not represent the Palestinian Terrorists, is virtually extinct - in any case, incapable of action, and largely irrelevant. Syria and Iran both benefit, albeit in different ways, from their alliances with well-organized terror groups (Hezbollah and Hamas) and each other, and have at this point no reason to even consider destroying such fertile relationships.
Perhaps most crucially, the American intervention in Iraq removed a source of competition to the Syrians, both as regards the legitimacy of Baathist Socialism within the Arab nationalist camp, and as far as destabilizing influence in neighboring countries is concerned. Since the fall of Saddam, co-operation between Iran and Syria has thrived as never before. There is no strong Sunni voice in the Levant to counter Shia and Alawite political aspirations, no Arab country that realistically competes for influence in Syria's backyard. By removing Saddam Hussein and his clique, American actions have strengthened both Iran and Syria, and in retrospect it seems that American influence itself has faded everywhere in the region.
Without repercussion and extreme disadvantage to the Syrians on their own soil, it is utterly unlikely that Syria will break its bonds with Hamas and Hezbollah. And unless that happens, there is little point in considering Syria a potential peace-partner, nor is there much benefit in any discussions with Damascus.