It may already be too late for Israelis and Palestinians to be able to reach an agreement using the present format. The methods attempted by the sides thus far, and which for a moment seemed as if they were about to succeed, have failed. The peace process that began with the shake-up created by the first intifada almost 20 years ago has apparently reached the end of the road.

Many Palestinians, and many Israelis as well, estimate that the present period is among the worst in the history of the conflict in this land. The violent struggle between Fatah and Hamas is not good for Israel. Palestinian spokesmen reject out of hand any attempt to describe their situation as a civil war. Some say it is "a war of organizations," which is a more accurate description. Whatever the case, after the extensive coverage of the meeting between Prime Minister Ehud Olmert and Palestinian Authority President Mahmoud Abbas (Abu Mazen), two weeks ago, one of the Palestinian journalists declared that it is now clear to him that on one subject there is no difference of opinion among the rival Palestinian groups: They all agree that the State of Israel does not want peace.

The result of the Olmert-Abu Mazen meeting served the Palestinian spokesmen as excellent proof of that. There was no release of Palestinian prisoners. There was no easing of restrictions at the checkpoints. There were, rather, an announcement (which was prominently publicized in the Arab media) of the establishment of a new settlement in the northern Jordan Valley, and a military raid on Ramallah in which Arab non-combatants were killed.

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In hindsight, we can point to one of the reasons for the painful failure of the peace process. The method of working toward an arrangement in stages, without a decision being made a priori on the final goal, did not work. The problem was not in the stages, but in where they were meant to be heading. Therefore, in every stage of the diplomatic process, each side tried to improve its positions, in anticipation of both the next stage and the final goal that suited it.

Take, for example, the issue of Jerusalem. Because there was no agreement in principle as to what the final status of Jerusalem should be, successive Israeli governments made every effort to reinforce the Jewish presence in East Jerusalem. The Palestinians, for their part, tried to block this and to establish a political presence of their own in the city. Israeli governments built Jewish neighborhoods in the east of the city and expelled Arabs by denying them their right to live in the city. The PA demonstrated opposition. They called it "ethnic cleansing." They operated national institutions such as the Orient House, and late PA chair Yasser Arafat called for a million shaheeds to march on Jerusalem.

The result was that, on the issue of Jerusalem, as on other issues, instead of there being progress toward a compromise, there was a retreat. The conflict only deepened. Thus the period that followed the agreement about the stages of the diplomatic process turned out to be even worse than the period when there was no agreement at all.

The conclusion is clear. We must first of all decide between us on all the goals of the final-status agreement, and only then conduct negotiations over how to achieve them. We should agree, first of all, for example, that a Palestinian capital will be established in East Jerusalem, and only afterward should we conduct negotiations over how that will be accomplished, in light of the conditions and the reality that exists in the city. Such a diplomatic course may not suit the ideological leadership of Hamas, but it certainly does suit most of the Hamas electorate, who are prepared for an agreement, but have rejected the previous diplomatic path of the Oslo Accords and the present one of the road map.

Hamas leader Khaled Meshal said a few days ago that his movement is not blocking any diplomatic path - for the simple reason that such a path does not even exist at present. He is right. In order for such a path to exist, there has to be much more than concern on the Israeli side for the Palestinian "fabric of life" (the catchphrase of the Israeli defense establishment for the easing of restrictions) and promises to dismantle settlement outposts. We have to agree on the end of the process, in which a Palestinian state will be established within amended borders of the 1967 cease-fire lines, with its capital in East Jerusalem. Without that there will be nothing.