U.S. policy toward the Middle East is reaching a critical point. Although every U.S. instinct is to keep a safe distance from the explosive conflict between Israelis and Palestinians, the administration of President George W. Bush is being forced to take a more active role in the region. The success of U.S. policy will depend on its willingness to use its power and influence, especially with Israel, to encourage all sides to make a real peace. The failure to do so will undermine U.S. credibility in the region and around the world.

Mr. Bush took office deeply suspicious of U.S. involvement in the Israel-Palestinian conflict. He had seen his predecessor, President Bill Clinton, do his utmost to bring about a real peace; in the Bush administration’s view, the subsequent failure undermined U.S. credibility and the power of the president. The administration’s instinctive dislike for any Clinton policy compounded its reluctance to get dragged into the maelstrom. Mr. Bush’s long-standing sympathy for Israel, his personal relationship with Israeli Prime Minister Ariel Sharon and his antipathy for Palestinian Authority leader Yasser Arafat reinforced his desire to keep the United States at arm’s length.

That position appeared to give Israel the green light to do as it saw fit when dealing with the Palestinians. For many in the Muslim world, Washington was viewed as complicit in Israeli policy and actions. That perception has become problematic in the aftermath of Sept. 11.

The U.S. has continually maintained that the war against terror is not a war against Islam. Muslims find that hard to believe. They point to Washington’s willingness to look the other way as Israel bombs and bulldozes Palestinian cities and commits atrocities against the Palestinian people. This double standard undercuts support for the antiterrorism campaign, and fuels the Palestinian insurgency and the terrorism it creates.

There is another critical dimension to the U.S. Middle East policy. The administration has made no secret of its dislike for the regime of Iraqi President Saddam Hussein and its desire to remove him from power; Mr. Bush has reportedly approved a secret plan to overthrow Mr. Hussein. The Iraqi government’s attempts to procure weapons of mass destruction and its support for terrorist organizations have only added urgency to that objective. The U.S. cannot act alone, however, and a multinational coalition — one supported by regional governments — is impossible to create without progress in the Israel-Palestinian conflict. That imperative is driving U.S. policy.

Thus, Mr. Bush is reportedly preparing a plan that will demand sweeping reforms in Palestinian politics and security policy in exchange for U.S. endorsement of the establishment of an “interim” Palestinian state. He will also provide Israel with security guarantees. While Mr. Bush has previously spoken of a Palestinian state, those comments have always been general; the promise of a real state breaks ground.

While much depends on the specifics of the plan — the new state’s borders, its capital and the government’s power, what does “interim” mean? — there is widespread support for a Palestinian state. Palestinian lawyers, with help from other governments, have reportedly been working on a draft constitution. The document, said to be based on the Basic Law that has already been adopted by the Palestinian legislature and signed by Mr. Arafat, would provide for a real democracy. In other words, it is designed to diminish Mr. Arafat’s authority.

A consensus is emerging — among the U.S., Europeans and even other governments within the region — that Mr. Arafat is an obstacle to peace. He is a symbol of defiance to Israel for the Palestinian people, but his government has been marked by corruption and incompetence. His inability or unwillingness to take serious steps to stop the suicide attacks against Israeli civilians has damaged his credibility among the governments with which he must negotiate. Palestinian Authority statements denouncing terrorism have been halfhearted and unconvincing. When Israel this week stepped up its retaliation — announcing that it would seize Palestinian territory until the attacks stopped — Mr. Arafat’s office circulated a written statement denouncing the bombings, but Mr. Arafat did not read it himself. Once again, he appears to want it both ways.

That seems to be a habit in the Middle East. It may be the best way to ensure personal survival in the region, but it is no way establish a lasting peace. That is a lesson Mr. Bush needs to learn.

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