Elections to a self-rule council and the withdrawal from Arab population centres were to have taken place last July, but were delayed because of Israeli security fears and disagreement over the powers of the council. With Mr Rabin lagging in opinion polls, it is doubtful he now has the political strength to withdraw even if he wanted to.
Over the last six months Mr Rabin has been increasingly ambivalent about implementing the next stage of the PLO-Israeli agreement. He offered the PLO chairman, Yasser Arafat, the option of immediate elections but without an Israeli troop withdrawal. Instead Israeli troops would be confined to their bases.
Mr Arafat chose a second option offered by Mr Rabin, which was to continue discussions the PLO leader believed would take four months, about a full troop redeployment and elections. Mr Rabin believes the talks would take far longer. By speaking of building a new security line to separate Israelis and Arabs, he has also roused Palestinian fears that he will unilaterally annex parts of the West Bank.
Moves towards peace were already stalled before the bombing, but the outrage has hardened attitudes. A poll by the Palestinian Centre for Public Opinion last week showed that 53 per cent of Palestinians would like to see more "military actions", while one-third are against violence.
Since Israel and the PLO signed the peace agreement in Washington in September 1993, 110 Israelis and 196 Palestinians have died violently.
A poll of Israelis shows 50 per cent now favour halting talks, whereas 37 per cent want them to go on. Mr Rabin opted last week to continue the negotiations but in practice not to reach an agreement.
The decision of his cabinet to build another 3,000 apartments on the West Bank is also convincing Palestinians that - for now- the peace agreement is a dead letter.