The recent war in Lebanon would appear to have dealt a near-death blow to chances for Israeli-Palestinian peace.
The earlier electoral victory of Hamas prompted an Israeli (and international) boycott of the Palestinian Authority. This was compounded and rendered far worse by the Israeli reoccupation of Gaza - in the wake of the kidnapping of Israel Defense Forces (IDF) soldier Gilad Shalit by Palestinian militants - which appeared to place Israelis and Palestinians further and further apart.
A series of targeted assassinations by Israel, with their ever-growing toll on civilians (the so-called "collateral damage"), and the firing of Qassam rockets at Israeli population centers together emptied the Gaza disengagement of almost any positive value it had in the eyes of either Israelis or Palestinians.
The Lebanon War (II) then totally eclipsed the Israeli offensive in Gaza (which in July alone took 197 Palestinian lives). It also appeared to eclipse - possibly destroy - Palestinian efforts to achieve a national unity pact, while the successes of Hassan Nasrallah and his militant Shi'a movement, Hizbullah, in withstanding the IDF appeared to strengthen not only radical Islamic sentiment in Palestine but also support for militancy among the general population to some degree (not only in Palestine).
At the same time, Israel's failure in Lebanon brought with it the threat of still stronger Israeli action against the Palestinians in an effort to recoup some of the IDF's lost deterrent power. In addition, the Israeli government emerged from the war greatly weakened and buffeted, to the potential benefit of the extreme right. Right-wing parties were bolstered by general Israeli sentiment that the army had simply not been enabled (by the government) to exercise the full extent of force of which it was capable.
None of this would seem to constitute a formula for peace.
Yet there is another interpretation of these developments and of the potential ramifications of the war. Even as Israelis blamed unpreparedness and indecision for the IDF's apparent failures against Hizbullah, Israeli arrogance and blind faith in the use of force was seriously challenged.
Even as popular opinion polls showed increased militancy and support for the war, they also reflected majority support for the need to open a political path, that is, an understanding at least that force alone was not enough. (Some, albeit few, may even have concluded that force is not the answer at all.)

Unilateralism Discredited

Perhaps more significantly, the idea of unilateralism was totally discredited. Amidst the laments that Israel had not achieved security by withdrawing from Lebanon or Gaza (as "proven" by the violence that subsequently emanated from both areas), the logical conclusion that gradually emerged was that the problem was withdrawing unilaterally. From this one could certainly extrapolate that agreements - full peace agreements - such as those with Jordan and Egypt are far more promising for Israeli security than unilateralism.
Unilateralism was the main, if not the only, plank of Kadima, the party of Prime Minister Ehud Olmert. Without unilateralism the Israeli government was left without a policy: The Qassam rockets continued to fall, the cease-fire in the north threatened to collapse at any moment; there was little likelihood that Hizbullah would in fact be disarmed; and Olmert was under constant criticism and pressure. The population feared a renewed outbreak of war while the growing threat of Iran was constantly in the news.
In the face of all this, few options were open to the government: The government could try to deflect criticism by acquiescing to the right-wing elements (and thereby, most likely, eroding its own raison d'etre), or it might try to deflect the criticism by opening a new initiative - for an agreement.
The possibility that the second path might be chosen was suggested, indeed strengthened, oddly perhaps, by the outcome of the Lebanon War (II). For while the war did eclipse the Palestinian issue, the Arab-Israeli conflict was returned to center stage in the international arena. The international community became and remains deeply involved in the resolution of the war, concerned not only that hostilities may break out again, but also that they may expand within the region.
The Arab nations are particularly concerned because of the strengthening of militants in their own country as the popularity of Nasrallah spreads. And even the United States has spoken of the need to deal with the "roots" of the conflict - albeit with its own interpretation as to what those roots are. For most of the international community, the response to the war is a call for a resolution of the Arab-Israeli conflict, entirely, and an international conference to accomplish this.
A package deal would seem to be the answer. The logic - though not necessarily the order - of such a package may be the reverse of the customary thinking about a comprehensive solution. But the fragility of the cease-fire in Lebanon, the strengthening of militant Islam, and the concern over Iran have all added still more reasons for resolving the Palestinian issue, placing it in a broader context.
Thus a package deal might take the following lines: One element would be a peace agreement between Israel and Syria. Israel would have to give up the Golan (and the Shib'a Farms). But in return it would gain peace with Syria, the one remaining confrontational state on our borders; eliminate the critical assistance Damascus has provided Hizbullah - and the militant wing of Hamas; plus drive a wedge between Syria and Iran. Syria would get its territory back, a significant achievement that would serve to stabilize the faltering government of President Bashar Assad.
The U.S. would have to be part of the package, given Israel's unwillingness to act against American wishes. Syria would provide the U.S. with the closure of the Syrian-Iraqi border and the end of cooperation with the Iraqi resistance, closure of the offices of the militant groups in Damascus, and the isolation of Iran. In return Syria would receive reinstatement in the good graces of the U.S., including revival of its seriously declining economy, as well as the end of its isolation in the Arab world.
The package might include Lebanon, with Syria no longer fueling Lebanon's internal divisions via Hizbullah and others and striking a less threatening balance in the country (possibly even defining the Lebanese-Syrian border and opening diplomatic relations). Meanwhile a Lebanese-Israeli peace would become possible, with the Shib'a Farms issue settled, accompanied by an exchange of prisoners.
Syria has repeatedly signaled its interest in an agreement with Israel, even after Lebanon II. Much would depend, however, upon the attitude of U.S. President George W. Bush. If this attitude were based on ideology ("the Axis of Evil" theory), there would be no compromise or willingness to let Israel speak to Syria. If, however, it were based on what one American analyst has called "desperate pragmatism" due to the U.S. debacle in Iraq, especially before congressional elections, Bush might see the Libya-ization of Syria as a worthwhile achievement to tout. Frequent visits to the White House by former Secretary of State James Baker III and former U.S. Ambassador to Syria Edward Djerejian during the summer suggested that Bush might at least be considering the pragmatic path.
But the package deal does not stop with Syria nor deal sufficiently with the Iranian/Shi'a/militant Islamic threat. For Israel, the further isolation of Iran would help, immediately complicating Iran's maintenance of Hizbullah, but in the longer term and more fundamental sense, Israel could be extricated from the threat only by ending the Arab-Israeli conflict. And the key to that is the resolution of the Israeli-Palestinian conflict.
Iranian/Shi'a/militant Islam will find other pretexts and causes for its extremist rhetoric, but they will find it far more difficult if not impossible to focus on Israel. Their onslaught will continue to center not only on the West in general, but also on the secular/Sunni regimes, but the latter will be strengthened by the absence of the Arab-Israeli conflict, free (or freer) to cooperate with both Israel and the U.S., in their own struggle to prevent the extremists from using or taking over their territory. Indeed, resolution of the Palestinian issue is critical to dealing with the broader problem and therefore an essential part of the package deal.
This is what the Arab states realized some years ago, and what was fully understood by Yitzhak Rabin. This is what gave birth to the Saudi Initiative, codified in the Arab League resolution of 2002 as a Peace Initiative - namely principles for a comprehensive peace, including Lebanon and Syria, as well as Palestine. Endorsed by all the Arab states and reaffirmed in May 2006, this resolution offers "normal peaceful" relations with Israel, provided Israel returns to its 1967 borders. Given previous Israeli agreements to land swaps, and the old Clinton parameters for Jerusalem, this demand might well be met.
The remaining, most difficult issue, that of the refugees, is to be resolved, according to the Arab League resolution, through an "agreed" solution - phrasing that should ease some of Israel's concerns. Thus there is a basis for the package deal, in addition to the urgent need. And the vehicle proposed by the Arab League at the end of August, an international conference under the auspices of the UN, has been advocated by many in the international community.
Even the Lebanese cease-fire has contributed to the deal in the form of providing for what is supposed to be a strong international force to assist the national army in protecting the border - a potential model for ensuring security for the states of Palestine and Israel in the future. Of course, models have existed before, as have suitable vehicles. And while these may create some pressure or perhaps facilitate the achievement of peace, the critical element remains the will of Israelis. It is not inconceivable that the war has created conditions for the emergence of such a will.