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All the players now involved in shaping the reality in the Land of Israel want all the options. Prime Minister Ariel Sharon wants to preserve the government coalition and also to fight an unrelenting war against Yasser Arafat; he wants to give the impression that he is giving a new chance for dialogue with the Palestinian leader and also to prevent a walkout by the extreme right-wing parties. Arafat wants to be seen as a leader who is not part of the terror front and even objects to the actions of Hamas and Islamic Jihad, while also using them as a whip against Israel. President George Bush is trying to set up a coalition with the majority of the Arab and Muslim states, while also endeavoring to avoid a crisis with Israel. Only Foreign Minister Shimon Peres is free of this dilemma: More than the others, he is consistent in his method. He continues to insist, despite all the disappointments and frustrations, that there is no escaping an agreement with Arafat, and better today than tomorrow.

Sharon has become more realistic after seeing that his hope of using the September 11 terrorist attacks in the United States as a means to isolate Arafat failed abjectly. The "Arafat is bin Laden" equation was rejected by the entire international community and by the U.S. administration as well. Worse, this week there were incipient indications of a worrying change in the approach of the United States to the Israeli-Palestinian conflict. The essence of the disagreement does not entail any temporary move or a particular issue - such as the attitude toward Palestinian terrorism - but the American conception of how to resolve the conflict.

Officials in Jerusalem claimed that Sharon and Peres had not been taken by surprise by the leaks in Washington about Bush's intention of declaring the United States' support in principle for the establishment of a Palestinian state alongside Israel. There is nothing new in that, the officials noted, it is a well-known American position and even Israel itself has expressed similar readiness. The proof is that Sharon himself last week stated in a public speech that Israel wants to help the Palestinians set up a state, provided they abandon terrorism (that statement clashes with the Likud's policy platform and is already stirring discontent in the party). The devil will be in the details: Will this American initiative be accompanied by a format for implementing the Oslo accord, the Camp David summations and the Mitchell Report recommendations? Will the U.S. administration dictate to the sides the scale of the third redeployment? Will Israel be forced to stop all building in the settlements? And what will be the exact solution that will be proposed for the status of Jerusalem?

Israel knew the thrust of the speech that Secretary of State Colin Powell was scheduled to deliver at the United Nations General Assembly and about the possibility that Bush would meet with Arafat. There were indications that the new diplomatic direction would be accompanied by specific positions regarding the settlements and the scope of the next redeployment. The view in Jerusalem was that the American initiative was not intended to concentrate on a solution of the Israeli-Palestinian conflict, but derived from the administration's preoccupation with forming a coalition against the international empire of terrorism.

It was because of this that concern was voiced also in the Foreign Ministry, which wants to channel the violence into a diplomatic track. What the Foreign Ministry would like to see is a full American effort devoted to resolving the sensitive issues that make up the Israeli-Palestinian conflict, rather than handling this complex subject as an incidental outgrowth of the desire to eradicate bin Laden and his henchmen.

Although the Foreign Ministry was inclined toward the assessment that the reports about a shift in American policy were both premature and exaggerated, it would be a mistake to take this development lightly. First of all, it attests to an aim of further eroding the concession-oriented Israeli position that was presented to President Clinton and to Yasser Arafat at Camp David. (Dan Meridor, now a cabinet minister, warned Ehud Barak at the time that this would be the result of his flexibility: His proposals would not disappear from the political lexicon but would be seized on by the Americans to undercut the Israeli position further.)

The shift in the American approach bespeaks an extremely serious political failure for Israel: After a year of incessant terrorism, in which Israelis were called upon to demonstrate tenacity in part to enable the government to preserve the country's political assets, the possibility looms that the administration will turn away from Israel and thus reward Palestinian terrorism. Moreover, the American plan was formulated without coordination with Israel - in complete contradiction to the administration's promises.

Sharon, in any event, was quick to draw conclusions. He understood that he had to launch a political and publicity campaign with the aim of persuading American public opinion that the administration is wrong not to include the Palestinian rejectionist organizations on the list of terrorist gangs against which Washington is now readying itself to take action. Sharon is sending people to the United States - Communications Minister Reuven Rivlin is one of them - to explain the Israeli position. They will argue that according to the criteria set by the administration itself, Hamas, Hezbollah and Islamic Jihad are terrorist organizations in every respect and that anyone who abets them, or does not act against them, is thereby tainted with terrorism. The definitions adduced by Bush, Powell and Secretary of Defense Donald Rumsfeld state that anyone who assists terrorists, permits them to train or finances them is considered to be granting protection to terrorism.

Not only Arafat but Syria and Iran, too, meet these criteria, the Israeli team will tell the Americans, on Sharon's instructions. The announcement by the spokesman of the State Department that Hezbollah, Hamas and Islamic Jihad are on the list of terrorist organizations did not change the prime minister's mind. His main goal is to thwart the administration's intention of creating the impression that it has not abandoned the possibility of dealing with those three groups, but that it wants to leave this for the second stage of the assault on global terrorism. Sharon maintains that the delay gives the organizations a green light to act against Israel in the meantime and enables Arafat to absolve himself of responsibility for their actions.

Officials in Jerusalem have been quoting a remark made by Syrian President Bashar Assad: "The fact that America does not intend to go after Hamas, Islamic Jihad and Hezbollah shows that it considers their activity to be legitimate."