After prolonged meetings the two sides were expected to initial an accord this week-end at the Egyptian resort of Taba. At the heart of the agreement giving autonomy to the West Bank is the division of Hebron whereby Israeli troops will guard the settlers and the Palestinians the rest of the city.
It will not be an easy compromise to maintain. The 400 Israeli settlers, and the 2,500 soldiers and police needed to protect them, live surrounded by 120,000 Palestinians. But the settlers' attachment runs deep - as deep as the ancient divisions between Jews and Arabs, for the Tomb of the Patriarchs at Hebron is sacred to both. Just as the Muslims were horrified by the desecration of the mosque, so Goldstein's massacre reflected his revulsion at presence of a mosque on one of the holiest sites of Judaism
The settlers do not conceal the fact that they approve of the slaughter and have turned Goldstein's grave into a shrine, while waging a war of harassment against their remaining Palestinian neighbours.
The settlers' headquarters is in a building called Beit Hadassah which was taken over in 1979. Their goats and other animals are kept nearby in a fenced-off area once occupied by Palestinian shops which were wrecked or driven out of business. Last week settlers were trying to close down a Palestinian girls' elementary school. Two women sit permanently outside its gate chanting prayers and spitting on the ground as frightened-looking children emerge.
Everywhere there are abandoned buildings and roads blocked off by Israeli checkpoints. There is the tense but silent atmosphere of a city after a bombing raid or an earthquake. Some of Hebron's busiest streets have been abandoned because cars are banned and Palestinians fear they will be stopped by soldiers or settlers. In one street last week Rifai Hashlamoun, who sells clocks and pictures, was gloomily closing his shop at midday saying: "I have been open since 7 am and I have not had a single customer."
Many other shopkeepers have given up altogerther. Bassam Eid of the B'Tselem human rights organisation says that "out of 76 Palestinian shops on Islamic Brotherhood street only 27 are still open for business. The gas station and bus station have both closed. In all there are 32 gates or checkpoints with concrete blocks in the centre of Hebron." Israeli military security has effectively strangled commercial life. It is by far the most violent city on the West Bank. In the last 18 months Israeli security forces have killed 26 Palestinians in Hebron against 13 in all the other West Bank cities combined.
President Itzhak Rabin and his government apparently underestimated the threat the Hebron settlers could pose to the future of the peace negotiations. Under the Oslo agreement of 1993 no Israeli settlement was to be moved during the present phase of Israeli withdrawal. This meant no end was in sight for the Palestinians to the Israeli occupation, made all the more onerous since the al-Ibrahimi mosque massacre,.
This was serious for Yassir Arafat, the PLO chairman, already criticised by Palestinians for being too accommodating in negotiations with Israel. Hebron is the capital of the southern West Bank. Its hinterland of villages and small towns has a population of 380,000. It is also commercially vibrant, shopkeepers from the city taking over most of the businesses in the Old City of Jerusalem.
As the talks at Taba moved into their final stages the Hebronites were deeply suspicious. Israel said it would not cede overall responsibility for the security of the city. "Arafat is willing to sacrifice us in order to get a foothold on the West Bank and the Israelis know it," said Khalid Amayreh. a writer from Hebron whose sympathies lie with the Islamic parties, early last week. "I view him as a political disaster. Settlers have only 5 per cent of Hebron city so why should they be able to prevent the autonomy of one third of the West Bank."
In the event it is not clear who conceded most. Israeli troops will stay in the centre of Hebron. They will control the access roads. A new bypass road is being built for the 7,000-strong Israeli settlement at Kiryat Arba on the edge of Hebron. The Palestinians, it seems, will get the rest of the city, taking over the military headquarters and bringing in 350- 400 lightly armed police and unarmed inspectors. They will also take over large Palestinian towns like Halhoul and Yata. There will be a real change in the balance of power.
It may be too good to be true. Settlers could try to torpedo the agreement by emulating Goldstein. It would not take much for the Palestinians to respond in kind. Khalid Amayreh says: "The situation is more volatile than ever. Palestinians in future will be well armed. Almost every Palestinian here has a personal vendetta with some settler from Kiryat Arba or the centre of the city. The potential for violence is still there."