A scenario like this has yet to be written: An entire country offers itself as a hostage to a terror organization and, to make sure it will not be easily liberated, heaven forbid, also suggests to a foreign government that it abduct it.

Fourteen months ago, when the Hamas government was voted in, Israel announced it would not negotiate with the elected authority as long as it did not recognize Israel. Those were the first handcuffs Israel employed. Half a year later, the soldier Gilad Shalit was taken prisoner by a terror gang from Gaza; the abduction ostensibly became a condition for any progress in diplomatic talks with the Palestinians. Israel thus created two cumulative conditions, a protective wall against any negotiations.

Last Thursday, the Arab states offered Israel another chance to free itself from its captors. The Arab initiative, which offers Israel peace and normalization in exchange for a full withdrawal and an agreed solution to the refugee problem, was again presented to the willing hostage and was again rejected. Ehud Olmert is indeed prepared to talk with the Saudis, but his readiness sounds like a polite nod toward an annoying gesture.

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Even Shimon Peres did not find anything helpful to say in an interview with Al-Jazeera and appeared to be afraid that adopting the initiative would force Israel to surrender its captivity and crack its protective wall. Israel today reminds one of the Stockholm Syndrome: People kidnapped in a robbery in 1973 felt such great affinity toward their abductors that several of them refused to be released and declined to testify against them.

It should be made clear: The Saudi initiative is not a precise formula or work plan. It does not come to replace the need for painstaking negotiations between Israel and the Palestinians and Syria. But it offers a vision. It is a strategic alternative that does not free Israel from its fight against terror cells, but it ensures Israel that these terror cells can no longer hold a veto over every diplomatic move.

The initiative is also not a security net against the abduction of soldiers or the firing of Qassams, but it invites Israel into the club of countries that are also battling local terror cells. This is a formula in which terror remains murderous and indiscriminate, operating on the fringes of society, but is no longer the terror of heroism and a symbol of national struggle. It is terror of the type condemned in Saudi Arabia, Egypt and Jordan, and not a "resistance movement."

But it seems the price required of Israel is higher than what is presented in the Saudi initiative because it does not "only" entail a withdrawal from the territories to the 1967 borders, or finding an agreed arrangement for the refugee problem. It requires adopting a new worldview that includes, alas, giving up the ethos of "a small people encircled by enemies," which is so comfortable and cushioned.

Israel's fear of the Saudi initiative is now commensurate only to that of the ephemeral terror organizations operating in Gaza and holding Shalit, or to the extreme fringes of Hamas. They understand that the moment real negotiations begin, the moment Israel returns to the old formula of "fighting terror as if there were no peace process and negotiating as if there were no terror," the gangs will lose their enormous power.

Thus, while the Arab states have recognized that as long as there is "respectable" terror it is very difficult to fight against terror at all, Israel has yet to understand this. Among other things, its refusal to openly adopt the Arab initiative fosters the "respect" enjoyed by the terror cells.

Israel continues to be mired in a war of neighborhood bullies, the arena that is so familiar, in which the Qassam is king and liquidation of "a senior wanted man" means victory. This is the charm of hostage status. The hostage knows every line in the face of his abductor and falls in love with him, but does not hear that there is already a new deal.