Herzliya Pituach, Israel

According to recent opinion polls, roughly 70 percent of Israelis--and about 70 percent of Palestinians--believe that two states living side by side in peace is the just solution to the conflict between them. Yet no solution is at hand. Indeed, a major address delivered by Prime Minister Ehud Olmert last week--and, even more, the political circumstances and climate of opinion in which he delivered it--dramatized not only the remoteness of any resolution but also Israel's ability to prosper even as the Palestinians remain unable to establish a state of their own.

To be sure, Israelis face a formidable array of national security threats. Weapons continue to flow from Egypt into the Gaza Strip (and thanks to Hamas's demolition of the wall that forms the border on the Sinai side, tens of thousands of Palestinians last week flowed from the Gaza Strip into Egypt). Hamas continues to rain down Qassam rockets on the civilian residents of the Israeli town of Sderot, five miles northeast of Gaza, and on surrounding kibbutzim. In the West Bank, Israeli security forces operate around the clock to foil terrorist operations before they cross over into Israel. In the south of Lebanon, Hezbollah has rearmed.

Slightly farther afield, satellite photographs show that Syria has begun to reconstruct what all the world believes to have been a nuclear facility destroyed by Israeli aircraft on September 6. And then there is Iran. Israelis are unimpressed by last month's U.S. National Intelligence Estimate assertion that Tehran suspended its nuclear weapons program in 2003.More in keeping with the same document's assertion that Tehran proceeds apace in its efforts to produce enriched uranium--the crucial ingredient in nuclear weapons--Israelis believe that Iran is determined to become a nuclear power and, should it succeed, would present a grave danger to Israel, the region, and the international order.

As if those threats were not enough, Prime Minister Olmert acts and speaks from a position of weakness. His approval rating makes President Bush's look sterling. He suffers from prostate cancer. He has been subject to a prolonged investigation for graft. He labors under the widespread perception, bolstered by the Winograd Commission's preliminary report last April on the government's conduct of the second Lebanon war, that -Israel's failure to achieve its stated objective--to inflict a crushing blow on Hezbollah--was significantly due to his poor leadership. And on January 30, the Winograd Commission will release the second and final component of its report, which knowledgeable Israelis expect to include a damaging assessment of Olmert's wartime decision-making.

So ask Israelis about the state of the nation, and they will tell you that things are grim and growing worse. But, observes political strategist Eyal Arad, chairman of the Euro Israel Group and former adviser to Prime Ministers Sharon and Olmert, ask Israelis about their personal prospects and many will tell you they have never had it better.

In fact, since recovering in 2003 from the Second Intifada, the Israeli economy is booming, particularly in high-tech industries. The stores are stocked with the latest European fashions and electronic gadgets from around the world. Newer, taller, more glistening buildings distinguish the Tel Aviv skyline. In addition, the health care system boasts excellent facilities, superb physicians, and universal coverage. Literature, music, theater, and filmmaking flourish. Radio and TV feature lively, loud, and nonstop discussion of issues great and small.

But it was Israelis' despondency about their nation's prospects, including apprehensions about their prime minister's integrity and judgment, that Olmert sought to dispel in his January 23 address, the culminating event at the eighth annual Herzliya Conference on Israel's national security.

While acknowledging mistakes, failures, and disappointments, Olmert insisted that the nation is sound, beginning with the 18 months of peace that northern Israel has enjoyed since the end of the second Lebanon war--the longest such period in the 25 years since the launch of the first Lebanon war in 1982.

He confirmed that, thanks to Syria and Iran, Hezbollah has rearmed; it possesses not only more rockets and missiles but newer and more dangerous weapons today than on the eve of the 2006 war. Yet, insisted Olmert,

The unarguable fact is that the Hezbollah is not deployed along Israel's border in the North; its fighters do not come into contact with our soldiers, and not one Hezbollah missile or rocket has been fired towards Israel for a year and a half. For the first time, the Lebanese Army is deployed on the border with Israel. For the first time, there is an effective international force serving as a buffer between ourselves and the Hezbollah.

Moreover, from his government's failures and mistakes, "lessons were learned, shortcomings were rectified, patterns of action were changed." Meanwhile, the quiet in northern Israel, contended Olmert, reflects the reestablishment of deterrence, central to Israel's national security doctrine.

Concerning the war in the south, the prime minister stressed his full approval of Defense Minister Ehud Barak's decision to impose a partial blockade on Gaza. While Israel would not allow "a humanitarian crisis to develop," it would also not continue to supply all the energy Hamas needed to run a terrorist state:

We will not stop food for children, medicine for those in need nor fuel for institutions tied to saving lives. However, there is no justification or basis to demand that we allow the residents of Gaza to live normal lives, while mortars are fired and missiles are launched from their streets and the courtyards of their homes towards Sderot and the communities in the South.

Israel, Olmert declared, would not relent in the fight against Hamas, either in Gaza or in the West Bank.

But at the core of Olmert's speech was a commitment to the process the Bush administration launched at Annapolis. Despite the serious objections and genuine risks, there was, Olmert argued, no contradiction in taking advantage of a "historic opportunity"--consisting in the "deserving Palestinian leadership" of President Mahmoud Abbas and Prime Minister Salam Fayyad, "a sympathetic international community," and "an American president committed to the security of Israel and the unmistakable Jewish character of the country, at a level which is unprecedented in our history"--to achieve a political agreement with the Palestinians.

Many Israelis--and not a few well-informed Americans--believe that Olmert is engaged in a fool's errand. Supplementing the general consensus concerning the shape of a just solution to the conflict is a consensus among Israelis that the conditions for implementing that solution do not now exist and are not likely to come into being anytime soon. Despite the intentions of Abbas and Fayyad, Fatah is too corrupt, the Palestinian educational system is too poisonous, Jerusalem too sensitive an issue, and Hamas too appealing to too many Palestinians. Most important, any political agreement would require the Israeli army and internal security forces to leave the West Bank, but few in Israel believe that can be done without paying an intolerable price--exposing Tel Aviv and environs, the center of the country's commercial life and home to half its citizens, to constant rocket attacks.

The unlikeliness of a political agreement with the Palestinians is to be regretted, but by no means is it cause for despair. Chastened by 40 years of occupation and committed to a two-state solution the moment circumstances permit, a significant majority of Israelis are more than ready to turn their back on the Palestinians, to continue to orient their economy globally, and to contain the Palestinians without solving the conflict that divides them. This builds on the consensus forged by Prime Minister Ariel Sharon in the wake of the Second Intifada.

The evolving consensus includes both the repudiation by an important segment of the Israeli right of the dream of an Israel that stretches from the Mediterranean to the Jordan River, and the repudiation by significant segments of the left of the conviction that Israel is at fault for all the pathologies of Palestinian society and could correct them, if only its heart were in the right place.

Because it faces up to harsh realities without losing sight of the demands of justice, the evolving consensus reflects the strength of the nation.

Peter Berkowitz is the Tad and Dianne Taube senior fellow at the Hoover Institution, Stanford University, and a visiting professor at Georgetown University.

Next Page