The year 2005 may herald a new era of hope for the Middle East. The death of Palestinian leader Yasser Arafat has provided the opportunity for all parties to push with renewed vigor for a negotiated peace between Israelis and Palestinians. Amazingly, the interested parties appear to be making the most of this chance.

While Arafat was revered throughout the Middle East as a symbol of the Palestinian struggle, Israelis and Americans considered him a guerrilla leader unable to abandon the ways of war. Israeli Prime Minister Ariel Sharon came to office determined to marginalize Arafat and render him irrelevant. He succeeded: At the time of his death, Arafat had been confined to his Ramallah headquarters for over two years; he ruled an increasingly dysfunctional Palestinian Authority and its control over nominally Palestinian territory was shaky at best.

Mr. Sharon was abetted by the United States, which shared his view that Arafat was an obstacle to peace rather than an essential element of it. The administration of U.S. President George W. Bush largely ignored the Palestinian leader; when it did acknowledge him, it was primarily to demand that he loosen his grip on the Palestinian Authority and share power. Weakened, Arafat nonetheless was able to frustrate attempts to diminish his authority. As a result, a bloody stalemate ensued, Palestinians suffered and Israelis endured random acts of terrorism.

Arafat’s death has inspired hope among all participants that progress is now possible. Recent polls show that more than half of Palestinians now think his death improves the prospects for peace. They may be right.

Despite fears of a violent succession struggle, it appears that Mr. Mahmoud Abbas will assume the Palestinian leadership in elections Jan. 9 without a real challenger. Mr. Abbas is a moderate who has supporters among Israelis and Americans. In a recent interview, he called for an end to the armed resistance against Israel and acts of terrorism. If he can stop the terrorism and restore order in the Palestinian territories, he will have met the chief Israeli precondition for negotiating a deal.

Egypt has resumed relations with Israel and is once again becoming a player in peace talks. Egyptian President Hosni Mubarak signaled a shift in tone by praising Mr. Sharon as a man of peace. Cairo released an accused Israeli spy and has offered to help secure peace by training Palestinian security forces after Israel pulls out of the Gaza Strip this year.

That decision by Mr. Sharon — to unilaterally withdraw all Israeli settlements from the Gaza Strip — could recast the negotiating environment. The move has allowed the prime minister to create a “unity government” with the Labor Party, an essential step in creating the national consensus that Israel will need to negotiate an enduring peace with Palestinians. Mr. Sharon has also said he is willing to work with the Palestinians to pull Israeli troops out of Gaza for 72 hours and ensure that the January ballot is successful.

Sensing the moment is right, international leaders such as U.S. Secretary of State Colin Powell and EU foreign policy head Javier Solana have visited the region. Foreign ministers from Spain, Britain, Germany and Russia have also visited, as has British Prime Minister Tony Blair. After his trip, Mr. Blair announced that his country would host a conference early this year that will focus on Palestine and the problems it faces. Although Israel will not be attending, it has supported the meeting. The international donor community has pledged millions of dollars to help hold this month’s election. More funds will be available if the Palestinian Authority follows through on promises of reform.

Of course, many of the old obstacles remain. Hamas, Islamic Jihad and other Palestinian factions have resisted Mr. Abbas’ call to put down their arms and end the violent resistance. Israeli settlers have vowed to fight Mr. Sharon’s decision to withdraw from Gaza, even to the point of breaking the law and going to jail. And finally, even if all goes according to plan and the peace talks resume, Israeli and Palestinian positions on key issues remain far apart. Mr. Sharon says he will not give up parts of Jerusalem, which the Palestinians want to make their capital. Neither is he willing to give up settlements in the West Bank, a move that prevents the return to pre-1967 boundaries as the Palestinians have demanded. For their part, the Palestinians have shown no willingness to compromise on the right of return of refugees who fled when Israel was founded nearly six decades ago.

Still, the cup is more than half full. The transition in the Palestinian leadership offers the chance to change the environment surrounding the peace talks. Fortunately, the rest of the parties involved in the negotiations sense this opportunity and are trying to make the most of it. That alone is a reason to be hopeful in the new year.

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