Why is everyone so excited about the Arab initiative? From 1993 to 2000, Israelis and Palestinians negotiated. They failed. From 2001 to 2006, Americans and Israelis negotiated. They failed. Now there is a third chance - negotiations between the Arab world and Israel. Is this a case of third time lucky?

Israeli-Palestinian negotiations failed because they ignored religion and did not set an end-game. The Israelis expanded settlements. The Palestinians expanded terror activities. When they got to the end-game, Arafat was unable and unwilling to deliver the Islamists. They failed.

American-Israeli negotiations failed because they ignored the Palestinians. The letters of understanding between U.S. President George W. Bush and former Israeli prime minister Ariel Sharon removed Israeli settlements from Gaza and parts of the West Bank. The Americans removed Arafat and promoted democratization to reduce terror. Instead they brought the Islamists to power and terror increased. They failed.

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So now to the third option, Arab-Israeli negotiations. While the idea is not new, the possibility of implementation is. Israel called for this in 1967. The Arab world said "no, no, no." Egypt called for this in 1978, Israel said "no, no, no." Here is an opportunity both sides have wanted at one point in their history.

Israel will withdraw from all the territories it captured in 1967 from Egypt, Jordan and Syria and accept the "establishment of a sovereign independent Palestinian state - with East Jerusalem as its capital." A "just solution to the Palestinian refugee problem to be agreed upon in accordance with UN General Assembly Resolution 194" will be found. Every Arab nation will sign comprehensive peace treaties with Israel and promote economic, cultural and diplomatic normalization. In short, the Arab-Israeli conflict will become history.

So why might the Arab initiative work when all others have failed? First, we already know the end-game. The territorial map is more or less clear. There will be minor border adjustments but the Palestinians will get 100 percent of the territory captured by Israel in 1967. For Israel this is true "land for peace." This is no hudna ("calm"); it is a full peace treaty.

Second, it offers an authentic Arab and Islamic address. The Arab world is the only force able to control the Palestinian people today. Gaza is an armed society ruled by the democracy of rifles. The appeal of International Islamism is exceeding the power of Palestinian nationalism. If Hamas sends another bomber or missile into Israel, they will have defied Saudi Arabia, the rulers of Mecca.

Third, it will offer the strongest counterweight to the rise of non-Arab, Shi'ite Iran. Iran spreads two ideologies: Shi'ism and Islamism. Hezbollah offers a perfect fit. Hamas only listens to the second. The Arab world wants to bring Sunni Islamists such as Hamas back into its camp. This will not stop Iran's nuclear ambitions, but it will limit the country's capability for low-intensity proxy warfare. If the Arab world can win back Syria at the same time - even better. This suits Israel's strategic interests, too.

So what are the sticking points? First, the comprehensive peace approach involves bringing in Syria from the cold at a time when the international and the Arab community are alarmed at Syria's build-up of arms, enraged at Assad's rape of Lebanon, and incensed at Damascus' alleged assassination of Rafik Hariri, Lebanon's former prime minister.

Second, the initiative demands that Israel leave East Jerusalem, including the Old City, and uproot half a million Jews. The Arab leadership knows this will not fly. They know the Jewish commitment and connection to Jerusalem and the larger settlement blocks. It is probably an opening position to keep all 22 Arab countries united, but the Jerusalem issue will stir religious emotions throughout the globe. Who knows what will happen when the Jerusalem genie comes out of the lamp?

Finally, the refugees. The Palestinian refugees dispersed throughout Syria, Lebanon and the Arab world will shout for a return to Israel, not Palestine. The Jewish refugees from Arab countries will shout for compensation. But don't be fooled, the key issue is "justice." The Arabs want Israel to take historic responsibility for starting the 1948 war and creating the Palestinian refugees. The Israelis remember the Palestinian collaboration with the Nazis and their calls to ethnically cleanse all the Jews of Arab and Muslim lands. This was a war of survival, not one of retribution.

The initiative is bringing sworn enemies together - the Islamists and Israel. It is bringing both sides' dirty laundry out into the open. The Islamists in the Arab world still want to destroy Israel, but will be forced to recognize the existence of the Jewish State. Israel, which prefers negotiating with nationalists and always feared the power of the Islamists behind Arafat, will have to accept the existence of a predominantly Islamist government in Palestine.

This is not a pan-Arab initiative, but a pan-Islamo-Arab initiative. That is why it comes from Saudi Arabia, the heart of Islam and not Egypt, the heart of the modern Arab world. Israel should react positively because ultimately it needs to make peace with the Islamic people of the Arab world and not just with their Westernized leaders.

So does the initiative have legs? Yes. Will it make it to the finishing line? Maybe. But what is for certain is that it is the best way to reduce the growing influence of Iran and contain the Islamists in the region, and maybe the world. Is this third time lucky? I hope so.

Terry Newman is the former Political Aide to Lord Janner of Braunstone in the British Parliament. He currently works between Egypt and Israel as a political analyst and business consultant. (www.terrynewman.com)