Palestinian President Mahmoud Abbas (R) meets with King Abdullah bin Abd Al-Aziz Al-Saud during the Arab Summit in Riyadh, Saudi Arabia. (Maan Images)

George W. Bush and Israeli Prime Minister Ehud Olmert are letting what could be the last, best opportunity to resolve the world's most dangerous conflict slip through their fingers. Unless both leaders somehow find the wisdom and vision to seize the moment, 2007 may be remembered as the year when the chance for a lasting peace between Israel and the Palestinians slipped away for the last time.

Last week Saudi Arabia revived the Arab League's 2002 peace initiative. This offer, backed by every Arab country, offers a fair solution to the crisis. It is basically a land-for-peace deal along the lines of the Clinton parameters and the 2003 Geneva accord. The rudiments of the plan are that Israel will return to its pre-1967 borders, with some territory swaps to be negotiated; a reasonable compromise will be worked out on the issue of refugees; and East Jerusalem will become the capital of Palestine, with Israel maintaining control over the Jewish holy sites and Jewish neighborhoods. Such a plan represents the only solution that will be acceptable to both sides. Essentially, the Arab states have told Israel: Whatever you work out with the Palestinians will be agreeable to us.

But despite U.S. Secretary of State Condoleezza Rice's suddenly more active diplomacy and Olmert's invitation to Arab leaders to meet at a future regional peace conference, there is no indication that either the Israelis or the Americans are willing to take the steps necessary to make peace.

Rice headed home last Tuesday in diplomatic humiliation. She wanted to prod Olmert to discuss final-status issues, but was unable to get him to agree to anything more than meeting with Palestinian President Mahmoud Abbas twice a month. As veteran Israeli peace activist Uri Avnery caustically commented, "Julius Caesar, as is well known, reported to the Roman Senate, 'I came. I saw. I conquered.' Condoleezza could report to the US Senate: "I came. I saw. I capitulated.' Who to? To a failing Israeli prime minister, whose popularity rating is approaching zero and who practically nobody expects to survive to the end of the year. In the ongoing debate about which is wagging which --- the dog its tail or the tail its dog -- the proponents of the tail have won the day."

Olmert's call on Sunday for a regional conference appears to be a positive step, but it is nothing more than diplomatic window-dressing designed to give the appearance of open-mindedness and bolster his approval ratings. (Considering they now stand at 3 percent, this should not be hard to do.) Olmert has refused to deal with the real issues, and Rice, who obviously lacks Bush's support, has not forced him to. Both Israel and the United States still refuse to end the boycott of the Palestinian unity government. They refuse to go directly to final-status issues. And they refuse to talk to Hamas, because they consider it a terrorist organization that will not recognize Israel or forswear violence.

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In some dreamworld where enemies are nice and don't blow up each other's civilian populations, this rejectionist position -- which Bush has embraced with such ringing success in his "war on terror" -- would make sense. But as history has shown time and again, it is precisely the most hard-line and unappealing of your opponents that you must talk to. A painful historical irony underscored that this week: While the United States and Israel continued to dwell in a self-righteous fantasy land, hard-line Protestant leader Ian Paisley and longtime Sinn Fein head Gerry Adams announced that they were prepared to share power in a new Northern Ireland government -- giving the world, and the long-suffering people of Northern Ireland, hope that the bitter, bloody conflict might finally be ending.

As veteran Mideast expert and conflict-resolution analyst Helena Cobban noted, citing the work of University of Ulster expert Cathy Gormley-Heenan, the negotiations worked because both parties finally understood "the need to embrace political inclusiveness in the peacemaking. The sole criteria for inclusion in the process in Northern Ireland, [Gormley-Heenan] said, had been (a) willingness to abide by a ceasefire, and (b) the holding of a clear mandate from the electorate." Cobban added, "Note that by these criteria, Hamas could and should have been included in the peace diplomacy, while the government of Israel -- which never abided by any ceasefire toward the Palestinians over the past year -- would not." Cobban added that neither the Northern Ireland talks nor the diplomacy that ended the South Africa conflict required either side to give up arms or recognize any "rights" held by the other side -- conditions that the United States, the European Union and Israel have insisted Hamas meet before they accept it as a legitimate partner.

In short, the simple fact is that no peace is possible without dealing directly with Hamas and grappling with final-status issues -- getting real, in other words. Neither Bush nor Olmert is prepared to get real. And while they fiddle and Rice runs impotently around, the region burns, al-Qaida and its ilk gain in strength, the Palestinians' half-century-long tragedy continues, Israel's long-term situation continues to deteriorate, and America's standing in the Middle East sinks ever lower.

Israel's supposed "friends" in America will, as always, demand that the United States and Israel continue their hard line. But as M.J. Rosenberg of the Israel Policy Forum said, blasting the move by U.S. Rep. Ileana Ros-Lehtinen, R-Fla., to prevent the United States from working with the Palestinian unity government, "It's time for the pro-Israel community in this country to stop pretending that those who work to thwart U.S. peace efforts are friends of Israel. They are not. They are champions of a hopeless status quo."

Indeed, some experts believe that the status quo is even worse than hopeless. Middle East Project director Henry Siegman, a veteran analyst whose pieces in the New York Review of Books and elsewhere are among the most cogent on the subject, said this is the last, best chance for peace. And he believes that if the United States and Israel don't seize it, the Jewish state will find itself heading down a dark road -- one that could even lead to its doom.

Siegman believes this opportunity must not be squandered, for two reasons. First, the Arab states will not repeat their offer if it is spurned. "The Arab states have decided that they would like to bring this to an end by offering Israel complete normalization -- political, economic and so on," Siegman told me. "But if their offer is turned down, and if the Arab world sees it as Israel simply slamming the door in their face, they will not be able to resume it."

Second, Siegman said that if this deal isn't closed, ordinary Palestinians will simply give up on the two-state solution. "For years, important Palestinian voices have said, 'Why are we pleading, why are we begging? We now have 22 percent of mandated Palestine. Israel has 78 percent. Why are we begging for crumbs? Why don't we forget about our state, and history, if we are patient, will give us all of it?'"

If there isn't real progress toward a two-state solution, Siegman said, "that view will become widely accepted in the Palestinian community. Because it's not as if they have an alternative. If you can think in terms of a longer time line, they're suffering anyway under occupation. And they say, 'The kind of deal at best we're going to be offered is an occupation by other means. Even in the small sliver that is left to us, we will not be genuinely sovereign and independent. We'll be totally under Israeli control. Why should we settle for that? We've suffered for 50 years, let's wait another 50 years. Then we will be clearly the vast majority in this land, and Israel's position as a Jewish state will become entirely unviable.' That view will come to predominate. And there's a certain logic to it that is difficult to escape, particularly if there is no alternative. At least not an attractive alternative."

Siegman is referring to what many Israelis have argued is the greatest danger facing the Jewish state: the so-called demographic threat. In just a few years, thanks to explosive Palestinian population growth, Jews will be a minority in Greater Israel, the area composed of Israel proper and the occupied territories. As Siegman pointed out, unless Israel divests itself from the occupied territories, this will leave it in an untenable position. "How long will the world accept a situation in which a Jewish minority refuses to grant sovereignty to an overwhelming Arab majority?" he said. "The U.S. will not be able to support that situation. If a Jewish population that is only 35 or 40 percent of the total, or even less, continues to deny all rights to 6 million, 8 million Palestinians, that's simply not sustainable. An occupation can only last so long."

The Saudi peace plan is a lifeline that could save Israel, Siegman said. But Olmert -- inexplicably, since he was one of the first Israelis to publicly raise the demographic issue -- lacks the vision to understand this. Instead, he is "taking the easy way out" by stalling and trying to avoid entering into genuine negotiations with the Palestinians. "If Olmert had an interest in pursuing a serious peace process, he has ample opportunity to do so now," Siegman said. "He has the wiggle room to do it. He knows that there is room for negotiation on all of the final-status issues. But that's not what he's looking for. He continues to look for reasons not to engage in the process so that at some point he can say, 'Well, we tried, but we have to do it unilaterally.'"

To read the full article please visit Salon.com.