01:00 AM EST on Sunday, December 26, 2004

WASHINGTON

YOU MAY HAVE NOTED the absence, in recent years, of a perennial holiday story: The pilgrimage to Bethlehem around Christmastime. Since the collapse of the Israeli-Palestinian peace process, and the commencement of the second Intifada, the city where, according to the New Testament, Jesus was born has not been especially hospitable to visitors. If you aren't blown up by a Palestinian bomber, you could be shot by a trigger-happy Israeli soldier.

Fifty-six years since the founding of Israel, and 37 years after the 1967 Six Day War, it is fair to wonder whether mutual animosity will ever cease and the cycle of violence -- Arab terrorism, Israeli repression, Arab subversion, Israeli harassment -- can be broken in the Holy Land. The record is discouraging. The occasional breakthroughs -- Anwar Sadat's flight to Jerusalem, the Oslo accords, the Camp David meetings -- seem to promise achievements that never come to pass. Interludes of Palestinian statesmanship are punctuated by campaigns of terror and resistance. The harder the Israelis press the Arabs, the deeper the hatred of Israel grows in Palestine.

In one sense, of course, these passions are comprehensible. Israelis who wish only to live in peace are accustomed to suicide bombs and random killings. Palestinians in exile from their homeland are subject to daily humiliation at the hands of Israel. The Jews who fled the pogroms and atrocities of Europe are determined to be safe and secure in their state. The Palestinian Arabs, having suffered for centuries in the Ottoman Empire and under successive colonial regimes, yearn for the right to self-determination.

Who or what will break the Gordian knot? I have been observing the Arab-Israeli conflict long enough to be a natural pessimist; but at the moment, it is worth pondering some immediate prospects.

As Donald Rumsfeld might say, there are certain things that we know. First, the State of Israel is a "fact" -- no serious Arab talks about its destruction -- but so is the prospect of a Palestinian state. Of course, there are rejectionist Arabs and Jews who say otherwise, but history has passed them by. George W. Bush may be Israel's best friend, but he is also the first American president to call for establishing a Palestinian state.

The Palestinians know that there are limits to their ambition -- the "right of return" within Israel, for example -- and Israelis understand that they cannot indefinitely maintain a democratic Jewish state where subject Arabs outnumber Jews. Translation: The Palestinians will someday have to settle for something less than they want, and the Israelis must someday get out of the occupied territories.

The problem, of course, is that both sides have oversold their case to themselves. The Palestinian leadership, such as it was, offered dreams of reprisal and reconquest, only to deliver disappointment and squalor. The Israelis thought that they could neutralize the Arabs by colonizing the West Bank and Gaza: Now Israeli politics is held hostage by the lunatic fringe in the settlements.

Yet history is not just the friction of competing forces but the drama of its players, as well. And by a curious convergence of events, the elements that might compose a settlement, and a nervous peace, have fallen into place.

First, George W. Bush, having conquered Saddam Hussein, has been elected to a second term with the promise to promote democracy (or some semblance thereof) in the Mideast. He is no longer beholden to prospective voters, and free to unfold his old road map to peace.

Second, Yasser Arafat, the symbol of Palestinian nationalism and resistance, has died. His likely successor, Mahmoud Abbas, may lack Arafat's emotional credentials, but he is a pragmatist who wishes very much to succeed, and enjoys the confidence of the United States and Israel.

Third, a grand coalition of Likud and Labor, under the joint leadership of 76-year-old Ariel Sharon and 81-year-old Shimon Peres, may finally break the stranglehold of Israel's marginal parties on progress toward peace with the Palestinians. Both are pioneers of the Jewish state. Peres has a long history of seeking accommodation with Israel's Arab neighbors, and Sharon, a general and godfather of the settlement movement, has the Nixon-goes-to-China credentials to bring Israel to terms.

To his credit, Sharon has expended considerable capital, and lost support in the Knesset, with his plan to withdraw from Gaza. But the question is motive. Does this signify recognition that the only guarantee of Israel's long-term survival is withdrawal from Arab lands and the creation of defensible borders? Or is the retreat from Gaza a cynical gesture toward the Americans while entrenchment and repression deepen in the West Bank?

If it ever comes to the modern Holy Land, peace demands vision and sacrifice from all sides.

Philip Terzian, The Journal's associate editor, writes a column from Washington.