The presence of the settlers remains a serious obstacle to an equitable settlement. But the incident need not kill the peace process. It could have happened at any time. It demonstrates both the urgent need for a solution and the obstacles to its achievement.
The incident took place when the Israeli military authorities had overall responsibility for maintaining security in the territories. There was no room for confusion. Much less clear will be the situation once Palestinian police are entrusted with maintaining security for the Palestinian population, while Israeli troops will have responsibility for Jews.
Israeli government leaders have expressed hope that the terrible events of yesterday will not derail the peace process. There are several reasons why their hope may be justified. First, the Israelis themselves have made a historic decision to disengage from the territories they occupy. The disengagement will not be immediate, but the process has started and is irreversible.
Second, the accord reached earlier this month in Cairo between the Palestinians and the Israelis overcame the most difficult of the issues holding up implementation of Israel's withdrawal from the Gaza Strip and Jericho area.
Under the first part of the Palestinian-Israeli accord, Israeli forces are to withdraw from the Gaza Strip and Jericho area, and, in time, withdraw from centres of Palestinian population. All sides agree that withdrawal from Gaza and the Jericho area poses the easiest part. Fewer than 4,000 Jews have settled in the Gaza Strip and all are well away from the Palestinian population.
Far more intractable will be the West Bank. There, some 120,000 Jews have settled, not including perhaps as many again in areas of Arab east Jerusalem annexed by Israel after the 1967 war. Most have chosen to live in separate communities on hilltops or in large purpose-built townships. But the Jews of Hebron have plonked themselves in the most virulently anti-Jewish town on the entire West Bank. And equally hardline are the Jews of Kiryat Arba, on the outskirts of Hebron. It is only with armed guards, and a large army presence, that they have managed to protect themselves.
Palestinians have rightly pointed to the injustice of the arrangements protecting the settlers. Yesterday's attack will only increase their sense of victimisation and vulnerability.
The Israeli Prime Minister, Yitzhak Rabin, cannot commit himself to dismantling the Jewish settlements even though he detests those who, for semi- mystical views of the Land of Israel, have made their homes in the West Bank. Such settlements were not established to ensure the security of Israel, like the early ones in the Jordan valley set up by a Labour government to which Mr Rabin belonged.
In this period of transition, more clashes can be expected, and much more blood on both sides spilt. But these are the birth pangs of a new nation, not its death throes.