Condoleezza RiceBy Gideon Rachman

Before the Iraq war, optimistic neo-conservatives came up with a new slogan about the Israel-Palestine conflict- “The road to Jerusalem runs through Baghdad.” American victory in Iraq would create the political conditions for peace between Israelis and Palestinians.

Now that the US is well on the way to failure in Iraq a new theory is doing the rounds. This time, “the road to Jerusalem runs through Tehran.” It is the rising power of Iran – fostered by the war in Iraq – that may create the conditions for peace between Israel and Palestine.

While the Baghdad road theory was based on an optimistic vision of the democratic transformation of the Middle East, the Tehran road theory is based on fear. It argues – essentially – that the rise of Iran is scary enough to give all sides in the Israeli-Palestinian dispute a new interest in finding a settlement. This has become especially urgent since the militant Islamists of Hamas – who are supported by Iran – have seized power in the Gaza Strip and split the putative Palestinian state in half.

Condoleezza Rice, the US secretary of state, is trying to take advantage of the moment. She has promised that a peace meeting will be convened this autumn. The usual suspects will be there- the Israelis, the Palestinians, the US, the Egyptians, the Jordanians. The Saudis might also come, which would be regarded as an important development.

The Saudis and other pro-western Arab states know that an Israeli-Palestinian peace deal would make it much harder for the Iranians to make trouble across the region. For the Israelis, a peace deal would offer the tantalizing prospect of a rapprochement with the pro-western Arab states as part of an informal anti-Iranian front. It would also offer the best hope of reversing the rise of Hamas. For exactly the same reason, the Palestinian Authority and Mahmoud Abbas, its president, badly need a deal. And US president George W. Bush would surely relish the chance to confound his critics by, improbably, becoming the American president who at last delivered a two-state solution. The real optimists talk of the establishment of a Palestinian state within a year.

It would be nice to believe it. But the forces pushing in the opposite direction are likely to prove even more powerful.

The growing power of Iran is certainly reshaping attitudes in the Arab world. But fear of Iran still seems unlikely to be powerful enough to compel the Saudis to recognise Israel – particularly since the Israelis are highly unlikely to yield on important Arab demands such as the “right of return” of Palestinian refugees. As one Israeli diplomat puts it- “In this region, the enemy of my enemy is still my enemy.”

Even some members of Fatah and the Palestinian Authority argue that Mr Abbas is likely to be offered a deal that he can only refuse. One prominent Fatah member predicts gloomily- “We will be offered a state within the borders of the Israeli security wall, which will mean losing huge parts even of the West Bank. The Israeli settlements will stay. Our borders will be controlled by Israel. We won’t be allowed an army. There will be no right of return and the Israelis will effectively take over Jerusalem. This will be presented as a temporary arrangement. But the temporary would become permanent.” Mr Abbas’s allies say that it would be political suicide for him and for Fatah to accept a deal like that. Hamas would take over the Palestinian cause by default.

When I put this scenario to a senior Israeli official in Jerusalem last week, he replied- “The Palestinians are being over-optimistic. They are not going to be offered even that.” The Israeli military – backed, it seems, by public opinion – is unwilling to take the risk of handing control of security on the West Bank back to the Palestinians. The vast security barrier that the Israelis have constructed has helped to keep out suicide bombers. But rocket attacks have been launched against Israel from Lebanon and from Gaza. Similar attacks from the West Bank could hit Israel’s big cities. So the Israeli military is likely to argue for retaining the hundreds of checkpoints, all over the West Bank, which make daily life and commerce impossible for the Palestinians. Trips from one West Bank town to another – which should take a few minutes – can often take hours because of the checkpoints.

The mood in Israel now seems to mix fear and complacency in a way that is probably fatal to the chances of a peace deal. The fear is a legacy of the Palestinian terror campaign that killed almost 1,000 Israelis. Memories of the suicide bombings – added to the rise of Hamas – have hugely undermined public willingness to take risks with security.

But the suicide bombings have stopped. And just at the moment, life is good. The nightlife of west Jerusalem – which was dead in 2002 – is now vibrant again. Last week, I went to the Jerusalem wine festival, where affluent Israelis sampled the latest Cabernets and Rieslings from the country’s boutique wineries. Palestinian towns such as Ramallah and Bethlehem were just a few miles away. But being behind the wall, they are out of sight and out of mind for the average Israeli. Gaza is sealed off even more effectively. As a result, for all the hand-wringing about Iran and Hamas, Israelis have rarely felt more secure. They feel little need to take risks for peace.

But the sense of security is a false one. As one Israeli official acknowledges- “We’re sitting on a time-bomb in the occupied territories.” Palestinian rage and frustration has already led to two uprisings. Israel’s security measures mean that the Palestinian economy is getting steadily weaker, while the spread of Israeli settlements gradually extinguishes the hope of a viable Palestinian state. The rise of Hamas is testament to the increasing radicalization of the Palestinian cause. And there will be more to come.

A truly bold Israeli leadership would take advantage of the country’s relative strength at the moment to secure a real peace deal – before the chances of a two-state solution finally disappear. This would mean making generous and painful concessions on the main issues – Jerusalem, settlements, borders.

The road to peace between Israel and Palestine does not pass through Baghdad or Tehran. It still runs through Jerusalem and the West Bank. And right now that road is blocked – literally and metaphorically – by a massive wall.