Now that a few weeks have passed, we are better able to assess the significance of former U.S. president Jimmy Carter's report, subsequent to his meeting with Khaled Meshal, that "Hamas will accept any agreement negotiated by Mr. [Mahmoud] Abbas and Prime Minister Ehud Olmert of Israel, provided it is approved in a Palestinian referendum."

This may sound significant, but neither the Olmert government nor the Bush administration responded to the news with cartwheels. They might explain their lack of enthusiasm in this way:

Hamas has made similar declarations in the past, but has always said that a referendum must include the Palestinian diaspora worldwide, and it continues to say it will not recognize Israel and will insist on the right of return for refugees. So any Olmert-Abbas deal will be opposed by Hamas, and will likely lose in the referendum.

Who is right here? Did Carter focus world attention on an overlooked but major opportunity to end the conflict? Or is this just more worthless, even dangerous, Hamas rhetoric?

The answer is: Jimmy Carter is right. Yes, Hamas has indeed said it will never recognize Israel, nor give up on the right of return. But, so what? In a demilitarized Palestinian state, Hamas will be a political party. Just like some of the crackpot parties in Israel, it can have whatever ideology it wants, so long as it obeys the law. And if Hamas is saying it will accept a ratified treaty as binding law, that is a very big deal.

But what about the argument that any reasonable treaty, from the Israeli point of view, will fail in a referendum? Here is where we fail to recognize that we are in the presence of a viable Hamas peace offer. It's what Prime Minister Ismail Haniyeh meant when, in a secret letter to President Bush that I delivered in June 2006, he wrote, "We are peacemakers, not warmongers."

It's true that Hamas can be expected to oppose any "reasonable treaty," as Haniyeh wrote then. What this means is that the price of peace has gone up, and that Abbas has a stronger hand. If Fatah and Hamas can institutionalize the ratification-by-referendum framework, Abbas will then be able to tell the Israeli leader: "You can force me to accept this or that humiliation, but if you do, the treaty's likely to fail in the referendum." A treaty that will win overwhelming support will come with a high price.

That price will be worth paying, though, if it brings an enduring peace. In my judgment, the Israeli-Palestinian conflict can be ended - quickly, truly and lastingly - on the following basis:

b Israel gets real security - guaranteed by Egypt, Jordan and the U.S. - and the Palestinian state is largely demilitarized.

b Israel and the Palestinians agree that ultimate sovereignty over Jerusalem's Old City, including the Temple Mount, belongs to God (polls show Hamas' followers would support this). Both sides would agree to disagree on political sovereignty, but would work out a viable administrative agreement not too different from what exists today.

b Further, Israel will be recognized throughout the Arab world, and there is reason to believe that Iran too would accept and respect the results of a Palestinian referendum.

b Finally, Hamas agrees that if it comes to power, it will abide by obligations of any treaties ratified by referendum among Palestinians worldwide.

But for the above to happen, Israel would have to make major concessions, which I envision as follows:

b Israel would have to evacuate nearly all of the West Bank, with any lands that it holds onto being leased, in exchange for lands within Israel that would be leased to Palestine. Any Palestinians living on leased Israeli land would do so as permanent residents, not citizens.

b Any 1948 refugees still alive (but not their descendants) would be permitted to return to Israel and would be provided with the means to make an offer to buy their lost homes from the present-day owners. The youngest of those would be 60 years old today, and in another 20 years, few will still be alive.

b Most of the refugees would receive financial compensation from Israel. Perhaps one-third of Israel's economic growth over the next decade would need to be channeled into compensation to refugees. Painful yes, but impossible, no.

Just about now, you are probably saying: Israeli politics will not sustain such a deal, and no prime minister would agree to it. The mistake we make is that we think this is the boundary of reality. It's not.

The U.S. has to go into "tough love" mode, and say to the Knesset: "Boys and girls, this is the price of peace, this is what you have to pay. Grow up." If necessary, President Bush can threaten to wake up Uncle Sam. That's a rotating role. The president's father, George H.W. Bush, played Uncle Sam when he risked his second term to butt heads with Israeli prime minister Yitzhak Shamir over continued settlement construction in the West Bank. He was also Uncle Sam when he faced down one thousand lobbyists from AIPAC, as he put it at the time, presenting himself as the lone sheriff facing the mob.

This time Uncle Sam would be able to say to Israel, "Not only is it in your interest to take this peace deal, it's in the U.S. national interest that you do so."

If President George W. Bush can find his inner Uncle Sam, Israeli politics will undergo an earthquake. Remember, David Ben-Gurion accepted a state with no sovereignty in Jerusalem at all.

For some reason, Bush fears doing so, so that Israelis will have to ask for that tough love. And for this there is precedent: Early in his first administration, Shlomo Ben-Ami, Amnon Lipkin-Shahak and Yuli Tamir wrote a letter to President Bush, urging that the U.S. put on the table a fully drafted American proposal along the lines of the Clinton parameters and "vigorously" encourage its acceptance. Today that appeal for tough love needs to be renewed - 100-fold.

Jerome M. Segal directs the Peace Consultancy Program at the University of Maryland's Center for International and Security Studies.