With Arafat's death, everything has changed. Now, at last, there is a window of opportunity

For half a century in the Middle East, pessimism has been the smart call. As a cemetery of false hopes, the Palestinian/Israeli conflict has no rival.

For half a century in the Middle East, pessimism has been the smart call. As a cemetery of false hopes, the Palestinian/Israeli conflict has no rival.

But, after four years of violence, intifada, and retribution, the stars in the firmament of peace suddenly are more favourably aligned than for many years, including even 2000, when there was the Camp David peace marathon between Yasser Arafat and Ehud Barak.

Suddenly, circumstances and individuals have been reshuffled, in Ramallah, in Jerusalem and in Washington. A year ago, the mix promised more of the dispiriting same. Today, if not a comprehensive settlement, then at least a serious and realistic negotiation towards such a settlement, seems within reach.

Yasser Arafat has gone. As long as he was Palestinian leader, the refusal of the Bush administration to have any truck with him meant the "peace process," the "road map" - call it what you will - was a dead letter. Now the outside power that above all can create the conditions for a deal has no excuse to stand aside. The same goes for Europe. After the estrangement over Iraq, Europe and the US are searching for common ground.

Where better than the Middle East, where Tony Blair and others have been pressing Washington for years? For their part, Palestinians are exhausted by an intifada that has only worsened their lot, and Israelis are aware that without a two-state solution they will be a minority in their own country. In short, both sides are ready for a new start.

Encouragingly, Condoleezza Rice has wasted no time in travelling to the region. Today's summit between Ariel Sharon and Mahmoud Abbas has an encouragingly practical agenda, reportedly centred on a ceasefire that would end the intifada.

George Bush is a crucial piece in the new equation. The salons of Europe may still sneer at him but the 43rd President sees himself as a "transformational" figure. And, having unarguably transformed Iraq (though with consequences that remain to be seen), why not now relations between Israelis and Palestinians? He has no further elections, only his legacy, to worry about. His determination is not in doubt. So might not a man described as the most pro-Israeli President in recent times defy every prior expectation, and move with genuine even-handedness?

While Mr Arafat was on the scene, the Bush administration made repeatedly clear it was incumbent on the Palestinians to make the first move. Only when terrorism and the intifada fully stopped could talks about a settlement begin, US policymakers insisted - forgetting the terrorism was fuelled by the failure of successive Israeli governments to make concessions, above all by halting the advance of settlements.

That approach is changing. In Jerusalem, Ms Rice spoke of "hard decisions" awaiting Israel, not just over the withdrawal of its forces from Palestinian cities, the dismantling of checkpoints and other daily humiliations visited on Palestinians in their own land - but also surely, over the future of settlements on the West Bank as well as in Gaza.

But although Mr Arafat is gone, huge obstacles remain, some of them wearily familiar, others the product of these changed times. Peer beyond the rekindled optimism, and the eternal quartet of "final status" problems still remain: borders, settlements, the arrangements for Jerusalem, and the right to return of Palestinian refugees.

The politics of land in the Middle East

By Anne Penketh

"Land for peace" has been the guiding principle for Middle East peace negotiations since the 1994 Oslo accords. A land-swap involving regional players in the Middle East conflict could emerge from an international conference if it is held under the provisions of the internationally backed road map, which lays down the timetable for a final peace settlement. An influential Israeli think-tank, the Herzliya Institute, is proposing land concessions by Israel, the Palestinians, Egypt, Jordan and Syria, which would compensate each other with land-swaps in return for secure borders. The plan provides for the removal of 40,000 Israeli settlers, with the evacuated settlements transferred to the Palestinian Authority. The borders of the Middle East were drawn arbitrarily after the First World War by Britain and France, with Britain obtaining Palestine and Iraq. After the violent creation of the state of Israel in 1948, the region's borders were unilaterally changed again in 1967 when Israel launched a "pre-emptive" six-day war, seizing the Sinai peninsula and Gaza Strip from Egypt, the Golan Heights from Syria and the West Bank and Jerusalem from Jordan. The land-swap proposals deal with the issues stemming from Israel's illegal annexation of the territories in 1967. The Sinai peninsula was returned to Egypt.

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