JERUSALEM -- Two years after the fight between Palestinians and Israelis began hurtling to an unprecedented level of violence, the cost to both sides has been enormous and the hope of ever restoring a peace process seems to have disappeared.
The death toll has reached the proportions of a full-scale war. More than 2,100 people have been killed since the uprising the Palestinians call the Al Aqsa Intifada began late September 2000. That includes more than 1,500 Palestinians and almost 600 Israelis. Five Israelis and a 19-year-old Scottish student were killed by a suicide bomber on a bus in central Tel Aviv on Thursday in an attack that marked the end of a six-week lull in terror attacks against Israeli civilians. The casualties on both sides include soldiers, fighters, police officers, settlers, old men and women, young mothers and infants.
The impact of the conflict on the economies and the way of life of both sides has been devastating -- far more so on the Palestinian side, but both people live in a state of fear, anger and frustration.
Palestinian suicide bombers have killed Israelis on buses, in their cars, in night-clubs, restaurants and hotels, penetrating the hearts of the major cities of Jerusalem, Tel Aviv and Haifa.
Israeli unemployment has reached as high as 9 percent. The national economy has been contracting for two years. The shekel, Israel's currency, is losing value. Tax revenue is plummeting.
Bus rides are life-threatening risks. Hotels are practically empty, and most restaurants have hired security guards for their trickle of patrons. (As if going to a restaurant in West Jerusalem weren't considered dangerous enough, Israeli security this month broke up a plot by Arab staff in a prominent restaurant to put poison in the food of Israeli patrons.)
"We're fighting for survival," said Raanan Gissin, chief spokesman for Israeli Prime Minister Ariel Sharon.
And severely punishing the Palestinian population in the process. Living conditions for large parts of the 3.5 million Palestinian inhabitants of the West Bank and Gaza are horrendous.
Gaza, where more than 1 million Palestinians live, many of them in hot, squalid refugee camps, is said to have an unemployment rate of 60 percent. Israel has sealed off the Gaza Strip, prohibiting anyone from leaving. About 100,000 Gaza residents used to work in Israel.
Roadblocks surrounding Jerusalem make it difficult, humiliating and sometimes impossible for West Bank Palestinians to get to the city. Palestinians may wait for hours at the hot, dusty checkpoints while Israeli soldiers determine the pace of the traffic and who may pass.
Curfews and checkpoints set up by the Israelis around major Palestinian cities and towns leave people unable to move out of their homes except for brief periods, or to get from one community to another.
Last week, a 12-year-old Palestinian was shot dead by Israeli soldiers in Ramallah. He had gone out during the curfew to buy cigarettes for his father.
In Jerusalem, the passionately disputed city where Israel asserts that Arabs have the rights of citizenship, it is not unusual to see Israeli soldiers pushing and shoving Palestinians in East Jerusalem, especially around the entrance to the old walled city and the nearby commercial district. On the outskirts of Jerusalem, near Biblical Bethany, a high wall has been built across the main street, barring any cars from entering by that route.
Aleko Karmieh, who lives in the Christian Quarter of Jerusalem's Old City, has a son who drives a taxi. Shaking his head one day recently, he said, "My son drove to take his taxi to Ramallah two days ago and he still has not returned." Ramallah used to be a 20-minute ride from Jerusalem.
Israel has used U.S.-supplied jets, helicopters and tanks to invade and demolish parts of Ramallah, where Palestinian leader Yasser Arafat is headquartered.
Friday, Israeli forces re-entered Ramallah in a reprisal for the suicide bombing in Tel Aviv, blew up three buildings in Arafat's compound and demanded that he turn over some 20 wanted Palestinians.
The bombardment was so intense that it raised the possibility that the Palestinian leader might have to leave the compound where he has been holed up for months.
Gaza, Jenin, Nablus and other Palestinian towns are also under siege. Israel has killed more than 75 Palestinians suspected of involvement in terror attacks.
Often, Palestinian civilians have been killed in these assassinations. Thirteen civilians were killed in three recent attacks. In addition, Israelis have demolished homes of suspected or known terrorists and their families.
This summer, a study conducted by the Johns Hopkins Medical Institutions for the U.S. Agency for International Development found that the Palestinian population in the West Bank and Gaza faced a crisis of malnutrition and susceptibility to disease.
Peter Hansen, commissioner general of the United Nations Relief and Works agency which cares for Palestinian refugees in Gaza and throughout the Middle East, said the number of refugee families in Gaza requesting food aid has risen to about 120,000.
No one disputes that all of this is happening -- neither the Israelis, nor the Palestinians. Why it is happening -- and who is responsible for killing the Oslo peace process that was so euphorically celebrated nine years ago -- is deeply, passionately disputed.
Israel blames Arafat, labeling him a terrorist and irrelevant. The government line, which is supported by the United States these days, is that Arafat is culpable for the terrorism against Israel because he first failed to close down the Palestinian militants and later signed off on a terrorist strategy.
The popular view is that Arafat believed Israel showed weakness when it withdrew from Lebanon after staggering casualties at the hands of Lebanese Hezbollah fighters and that he believed he could win greater concessions from such a weak party.
"As long as the Arabs smell blood and a weakness on the part of Israel, there'll be no chance of peace with them," said Daniel Seaman, an Israeli government spokesman. "They really felt they were going to be defeating us, especially after the withdrawal from Lebanon."
Whether or not this was Arafat's expectation when the uprising against Israel began, he may not have calculated that Sharon would be elected prime minister, thus putting at the helm of the Israeli government a man who has spent a good part of his life trying to get rid of Arafat and the Palestine Liberation Organization.
Sharon was the architect of the 1982 invasion of Lebanon to oust the PLO.
'No intention' for peace
Gissin, a close associate of Sharon who was the Israeli military spokesman during the 1982 war, finds some painful irony in having Arafat at the doorstep of Jerusalem.
"In 1982, we expelled them from Beirut. In 1993, we welcomed them into the territories. And they came, 30,000 strong," said Gissin.
Arafat never intended to make peace with Israel, the Sharon side insists. Oslo, as one Sharon aide after another repeats, is dead. In the far-right wing, there have been demands that everyone involved in the Oslo accords should be tried for treason.
"From the moment he entered here, he had no intention of keeping his commitments," said Seaman. "So I think Oslo was lost at that point. He used Israel's will for peace against us."
Sharon's campaign against Arafat culminated with the pounding siege of his compound last spring. He is still there, unlikely to leave.
"In terms of the chairman," Israeli Defense Minister Binyamin Ben-Eliezer said Friday, referring to Arafat, "We have no intention of expelling him or firing at him. We want to isolate him."
"Arafat is a very nervous person," said one source who spoke on condition of anonymity. "Part of the deal on the compound should have allowed Arafat to travel and then come back, but he's never trusted that Israel would uphold its end of the agreement and probably for good reason."
The Palestinians blame Sharon and the United States for effectively endorsing his position and his behavior, especially after the Sept. 11, 2001, terrorist attacks against the United States.
Sharon, the Palestinians argue, is no more interested in making peace than he says the Palestinians are. Palestinian moderates accuse Sharon of not only trying to make Arafat irrelevant but trying to make them irrelevant, too.
"I recognize the state of Israel. I want to go into a peace treaty with Israel. I condemn suicide bombings. I believe that we can achieve peace through a meaningful peace process, not through military solutions and violence," said Saeb Erekat, a member of Arafat's cabinet and a chief Palestinian peace negotiator. "Sharon doesn't know how to deal with people like me. He wants to destroy me. He wants to make me irrelevant."
The United States gives Israel the big weapons it uses against Palestinians. Palestinians traveling near Jerusalem and Bethlehem, and further into the West Bank, see hillsides draped with new Jewish housing beyond Israel's original borders, served by superhighways which Arabs are not allowed to use, facilitated by the billions of dollars in aid which the United States gives to Israel.
Israel has asked for $200 million in supplemental aid to cover its cost of fighting terrorism -- to be used against the Palestinians, as they see it. And American sources here believe they will ask for more.
Here's how Erekat sees the impact of Sept. 11: "We have Sharon who has hijacked 9/11. We have an American administration that's also hijacked by the extreme Zionists, other pro-Israeli elements and the Christian right, and you have the Palestinian extremists who are capitalizing on both. This means the destruction to what the Palestinian peace camp stood for."
Arafat faces some unusually strong criticism over corruption in his leadership circle from his community. Earlier this month, the Palestinian legislature -- usually regarded as a rubber stamp -- took the bold step of refusing to confirm Arafat's Cabinet.
It was a direct reaction to corruption and mismanagement. But it might have been even stronger if the United States and Israel were not clamoring so publicly for reform.
"I believe that reform is most important," said Erekat. "But the forces that are against reform say, 'Oh, you are taking orders from President Bush.' This cripples any Palestinian who stands for reform."
The sense of stalemate and despair is pervasive.
The reluctance of either side to take any bold initiative is being fed these days by the prospect of a U.S. attack against Iraq. Whatever the outcome of such an attack, it is bound to have a kaleidoscopic impact on the region.
"There's no doubt that the ripple effect and the shockwaves after the earthquake is going to hit everyone," said Gissin, Sharon's aide.
A source familiar with Palestinian and Israeli thinking said neither is likely to make a dramatic move until after an attack against Iraq.
"Sharon says, 'Well, I'm not going to have much change until I see what the U.S. does, if anything.' Arafat may be waiting for the attack assuming that the United States won't follow through, that Saddam [Hussein] will weather the war and come out OK with the Arab world."
'All bets are off'
How much worse can matters get here?
This month, a truck driven by Palestinians carrying half a ton of explosives -- about the same amount used in Oklahoma City -- was intercepted by the Israelis. If it had gotten through, it might have been the sort of "mega-attack" that the Israeli news media warns about constantly.
Earlier, Israeli security forces thwarted an attempt to blow up the fuel depot in Tel Aviv, which could have killed thousands.
"If something like that happens, all bets are off," said Seaman. "Israel would have to re-establish its deterrence in a very dramatic fashion. Such an attack could open the door to things that nobody dreamt of before."
Speaking of dreams, there are still some hopeful dreamers in Israel. One of the most thoughtful is Avrum Burg, speaker if the Knesset, Israel's parliament. Burg, a member of the Labor Party, is not a fan of Ariel Sharon. Burg believes that both sides can recover from the current crisis.
Most important, he said, certain facts exist now between Israel and the Palestinians that will not be undone, unthinkable as they might have seemed 10 or 20 years ago.
There is some sort of Palestinian Authority to deal with, even if Arafat can't be dealt with. There is an acceptance, he said -- and people on the right agreed in separate interviews -- that there will be "two states between the Mediterranean Sea and the Jordan River."
Burg said a consensus exists in Israel for dismantling most of the settlements, and here again, people close to Sharon agreed that the settlements could be dismantled. They have been an impediment to peace, Burg said.
"This has humiliated the Palestinians," he said. "They invested in incitement and we invested in the settlements. So the eruption was just a matter of time."
Israel has a dilemma, he said. "Sixty to 70 percent of the people support Sharon's policy, but 60 to 70 percent support various peace plans.
"We know where the story ends," he said. "Everybody knows today that a territorial compromise and a Palestinian state are inevitable facts. They're waiting for the implementation."