Last Monday's violent incident in Jerusalem – when a Palestinian drove his car onto a sidewalk wounding a dozen people, including several Israeli soldiers – highlights the dangerously explosive mood of the Palestinians and the bankruptcy of Israel's policy of land theft and harsh repression. A few hours earlier, Israel's foreign minister, Tsipi Livni, 50, the new head of the centrist Kadima party, was asked by President Shimon Peres to form the next Israeli government. She has six weeks in which to try to do so. If she fails, Israel must hold early elections next year. Meanwhile, Ehud Olmert, discredited by corruption scandals, remains in place as caretaker prime minister. Tsipi Livni says she wants to form a national unity government and devote herself to making peace. These are contradictory aims. She will not win the support of Binyamin Netanyahu's right-wing Likud party, which is opposed to any territorial concession to the Palestinians, and she cannot even count on Labour and Shas, Kadima's former partners in the outgoing coalition. Ehud Barak, the Labour Party leader, is playing hard to get. He does not like the idea of serving under Livni and may prefer to try his luck at early elections. Shas, the working-class Sephardi party, is demanding a big increase in child allowances as well as a formal pledge from Livni never to divide Jerusalem. Any such commitment would doom her peace-making efforts with the Palestinians. In spite of these severe problems, Tsipi Livni finds herself in a unique position. History has handed her an extraordinary chance to put an end to a 100 year- old conflict. Will she seize the opportunity with both hands? Will she be sufficiently daring and ambitious? Will she get the backing she needs from the United States, Europe – and from the Arab world? So far, the moribund peace process has faced three main obstacles: first, America's inability to put the slightest pressure on Israel – an astonishing phenomenon seen most clearly during George W Bush's presidency; second, the tragic spectacle of inter-Palestinian feuding, notably the war between Fatah and Hamas, which has provided Israel with a pretext not to move forward; and third, Israel's own notoriously unstable politics. Largely as a result of proportional representation, Israel's political spectrum is highly fractured, putting governments at the mercy of small parties and factions, each selling its support dearly. Few Israeli governments manage to serve their full term. Perhaps the worst news of all is that a great many Israelis and Palestinians have lost faith in the possibility of a two-state solution – that is to say the creation of a Palestinian state alongside Israel. This is probably the last chance for such a state – such has been the relentless expansion of Israeli settlements. Already some influential Israelis are dismissing the two-state option as unrealistic and are refloating the old idea of a ‘Jordanian option' – that is to say the division of the West Bank between Israel and Jordan. Such death-blow to Palestinian nationalism risks unleashing a new wave of violence – although a recent poll by Al-Najah University at Nablus suggests, surprisingly, that up to a quarter of Palestinians, in despair at the present stalemate, might opt for a Jordanian-Palestinian federation. Must Arab leaders remain passive spectators of this grim drama? This is surely the time for the Arabs to muster every scrap of influence they have in Washington – as well as their considerable financial muscle – to make clear to the next American president that only a resolution of the Arab-Israeli conflict will restore America's credibility, protect it from renewed terrorist attack, spare the Middle East further wars, and guarantee Israel's long-term security. Vast Arab oil revenues have created a pole of economic dynamism and political weight in the Gulf and Saudi Arabia. These great assets need to be mobilized for peace at this critical hour. But will the Arabs act? Or must their timidity and internal quarrels reduce them to impotence? Even if she manages to form a workable coalition – which is by no means certain – Tsipi Livni comes to the premiership at a difficult time for Israel. Its international reputation has been battered by its occupation of the West Bank and its cruel siege of Gaza, policies widely seen as morally unacceptable and politically unsustainable. Israel's military dominance has been dented by Hezbollah and Hamas, two sturdy non-state actors on its northern and southern flanks. It has tried but failed to crush them. Further afield, the rise of Iran as a major Middle East power is challenging Israel's regional supremacy. If Iran were to acquire a nuclear capability in the next decade, this would pose no ‘existential' threat to Israel, in spite of the war of words between the two countries. An Iranian bomb could serve only for deterrence – to protect Iran against attack. It could not be used to attack Israel – which is immeasurably better-armed – without Iran risking immediate annihilation. However, an Iranian bomb could curb Israel's freedom to strike its neighbours at will, which is no doubt why Israel has sought to rally the whole world against Iran's nuclear programme. Israel has another serious cause for concern. Its American ally – for years the provider of unstinted diplomatic support, lavish financial aid, and an array of modern weapons – is itself floundering under the twin burdens of an unprecedented financial crisis and two disastrous wars in Iraq and Afghanistan. Yet, without a robust push in favour of peace by the next American president, Tsipi Livni cannot hope to succeed in her mission – if indeed she is able even to start. Nevertheless, in spite of all these hurdles, Tsipi Livni has a real opportunity to change the current climate of despair and win her place in history. So, what must she do to create a momentum for peace? *She must stop settlement expansion immediately. *She must reiterate her commitment to the principle of land-for peace – and to a comprehensive peace, involving Syria and Lebanon as well as the Palestinians. *She must declare that she has no intention of using force against Hezbollah, Hamas, Syria or Iran, but that she will seek peace and reconciliation with them through negotiations. *She should invite Arab League Secretary-General Amr Moussa to Jerusalem to discuss the Arab Peace Plan, first launched in March 2002 and still on the table – which offers Israel peace and normal relations with all 22 Arab League member states in exchange for its withdrawal to its 1967 borders. Uri Avneri, the veteran prophet of the Israeli peace camp, urged Tsipi Livni this week to lose no time after her election as Prime Minister. “Fly! Fly to heaven!” he cried. “Set up a government coalition with the peace forces, use the first few months of your term to achieve peace with the Palestinians, call new elections and submit yourself and the peace agreement to the public test!” This is a brave and inspired vision but, in the circumstances, perhaps a utopian one. In spite of her good intentions, Tsipi Livni is more likely to remain earthbound, trapped in the strait
