The bulldozers clearing the way for a Jewish settlement in Arab Jerusalem may also have buried the peace between Israel and the Palestinians
The Hill looks like a long, green island stretching out from Jerusalem towards Bethlehem, its dark pine trees standing out against a background of olive trees and grazing land. Three months ago 90 per cent of Israelis and Palestinians had probably never heard of it. But when yellow Israeli bulldozers started breaking ground for a Jewish settlement last Tuesday, Har Homa seemed set to become the name on the tombstone of the Oslo peace accords between Israel and the Palestinians.

"It is as if you had a glass of water and somebody came and spat in it," said Shams Edin, a Palestinian restaurant owner in Hebron, describing the effect of Har Homa on the peace negotiations. A hundred yards away Palestinian teenagers were hurling stones at Israeli and Palestinian soldiers guarding a Jewish enclave in the centre of the city. An hour earlier a Palestinian man from Zufir village near Hebron had blown himself up in the Apropos Coffee House in Tel Aviv, killing himself and three Israeli women and wounding 47.

As with the suicide bombs last year the initial Israeli reaction was outrage. This increased when, live on Israeli television hours after the explosion, Ibrahim Maqademeh, the military leader of Hamas, the Islamic militant organisation, just released from prison in Gaza, told a meeting of his supporters: "We must have the control and the power to stop the bulldozers of the enemy. Our unarmed people will not prevent it [Har Homa] but rather the holy warriors carrying explosives on their shoulders and exploding the enemies of God."

Dennis Ross, who led US mediation in the past, said that the peace process had sustained worse blows and survived. But ordinary Israelis and Palestinians have understandable doubts about a peace process that does not provide peace and is unlikely to do so in future. The basis for the Oslo agreement in 1992 was the exchange of land for peace: Palestinians got land, through an end to the Israeli occupation of the West Bank and Gaza, and, in return, Israel would get peace. The cause of the violence of the past few days is that this is not happening. Just hours before the first suicide bomb for a year exploded in Tel Aviv, Benjamin Netanyahu, the Israeli Prime Minister, said that Palestinians would get 45-50 per cent of the West Bank, not the 90 per cent they expected.

The riot in Hebron on Friday, the most serious on the West Bank for six months, showed why this partial end to the Israeli occupation of the West Bank may create the worst of all possible worlds. The Hebron agreement in January, much applauded at the time, partitioned the city. There are 400 Israeli settlers protected by 1,000 Israeli soldiers living in its centre. Within the Israeli zone are 20,000 Palestinians and in the rest of the city, now under Palestinian control, are another 100,000 people.

Months were spent negotiating the partitioning of the city by the Labour government in 1995. Mr Netanyahu renegotiated the final agreement for six months. But as Palestinian boys fought Israeli soldiers in the centre of Hebron this week it became clear that all the negotiators had done was create a death-trap. They had placed two groups of people who detest each other side-by-side.

Settlers can only be protected by the massive use of Israeli fire power or by the Palestinian police and soldiers. On Friday a bloodbath was only avoided because Israeli soldiers fired few live rounds (though 13 of them were at one point surrounded) and hundreds of heavily armed Palestinian security men drove the rioters back.

But Hebron is a microcosm, as envisaged by Mr Netanyahu, of the West Bank as a whole. The Oslo accords as agreed in 1992 had a number of crippling flaws. Some 140,000 Israeli settlers were to remain in place in the middle of two million Palestinians. Few peoples in the world regard each other with such hatred but they were expected to live in each other's laps. But at least the Interim Agreement of 1995 was designed to end the Israeli occupation of the West Bank. The Palestinians would not formally have a state, but they would have something close.

Mr Netanyahu did not see it that way when he won the election last year. He said he did not envisage a Palestinian state, but something closer to Andorra (this angered the Andorrans). He argued that there was no chance of the Palestinians reversing the verdict of the Six Day War in 1967, when Israel conquered the West Bank and Gaza. He said Israel would never "agree to shrink to the sea coast beside a Palestinian state that will threaten us." In practice what Mr Netanyahu envisages is a series of Palestinian cantons or islands in the West Bank surrounded by Israeli-held territory.

The events of the last week show this is a recipe for war rather than peace. Behind the saccharine rhetoric of the Oslo accords was recognition of a balance of power between the Israelis and the Palestinians. The balance was much in favour of Israel. But it also reflected that the intifada (Palestinian uprising) after 1987 had shown that Israel could not passively occupy the West Bank. In the words of Yossi Beilin, one of the architects of Oslo, "Israel's sensational victory of 1967 became a curse".

But Mr Netanyahu claimed Yitzhak Rabin, the Israeli prime minister, and, after his assassination, Shimon Peres, his successor, were giving away too much. They were unnecessarily raising Palestinian and Arab expectations. Both the opening of the tunnel leading into the Muslim quarter of the Old City and the construction of a settlement for 27,000 Jews at Har Homa seem geared to showing that Israel could act unilaterally, regardless of what Palestinians wanted.

But in practice Mr Netanyahu does need Palestinian cooperation. Last week he wrote to President Clinton saying that under the Hebron agreement Yassar Arafat, the Palestinian leader, is meant to have just 400 policemen in Hebron "but 1,500 Palestinian policemen are operating in the city, many of them armed with firearms." What the letter doesn't say is that the excessive number of armed police (many of them, in fact, combat soldiers) are in Hebron, Gaza and the West Bank with Israeli encouragement because they wanted Mr Arafat to crush Hamas and Islamic Jihad.

But it was never likely that Mr Arafat's Palestinian Authority (PA) could maintain a powerful security force - it numbers some 40,000 armed men - when dealing with Islamic radicals, yet its strength would somehow shrink to the level of Andorra when it came to relations with Israel. It was also improbable that Mr Arafat would keep Hamas leaders in prison without trial unless Israel went on implementing the Oslo accords.

But Mr Netanyahu's allegation against Mr Arafat after the bomb in the Apropos cafe is much more specific than saying he did not stop the suicide bombers. The Prime Minister says Mr Arafat signalled the militants that they could resume attacks. He claims: "There were talks between the Hamas and the PA and between the Islamic Jihad and the PA. These organisations interpret what was said to them as a green light."

There is probably something in this. Security cooperation with Israel is the strongest card in Mr Arafat's hand. If he thought he was getting nothing for it in return, then he may have felt it useful to remind the Prime Minister what would happen if he let Mr Maqademeh and his like out of prison. But it is also a dangerous card to play.

Last year it was just four suicide bombs, killing 61 people in Israel, which put Mr Netanyahu into office. Now he faces the same problem as Mr Peres. His winning slogan in the election was "peace with security". In order to provide this he needs co-operation with Mr Arafat. But if he only withdraws from part of the West Bank, refuses compromise on Jerusalem and rejects a Palestinian state, he is unlikely to get it.