JERUSALEM, Aug. 21 (JTA) — Next week in Berlin.

That is the new mantra for the shrinking number of Israelis who still hold out a slender hope that Israel and the Palestinians can negotiate a peaceful end to the last 11 months of violence.

Foreign Minister Shimon Peres, Israel’s indefatigable peacemaker, and Yasser Arafat, the Palestinian Authority president, are to meet in Berlin under the aegis of the German government.

Peres has proposed a “graduated” or phased cease-fire, to be implemented region by region across the Gaza Strip and the West Bank, with Israeli troop withdrawals in response.

Arafat has proposed nothing, but has told the visiting German foreign minister, Joschka Fischer, that he is ready to listen.

The German statesman is one of the few international figures respected by both sides. His desperate diplomatic efforts in the wake of the disco bombing in Tel Aviv on June 1 are credited with heading off a major Israeli military reprisal then.

Fischer was back in the region this week trying to fill what some observers feel is a yawning diplomatic gap left by the Bush administration’s reluctance to commit too much of its prestige and credibility to the often thankless task of Middle East peacemaking.

European leaders hope to take advantage of the lowered American profile to increase their own role in Middle East diplomacy.

Fischer utilized a recent agreement between Peres and Prime Minister Ariel Sharon that allows Peres to launch a new effort to engage the Palestinian Authority in negotiations — despite Sharon’s oft-stated insistence that Israel will not talk “under fire.”

Peres agreed to Sharon’s condition that any talks will be solely about a cease-fire and not deal with more “political” issues, such as the diplomatic concessions the Palestinians can expect if they agree to a cease-fire. Many here note, however, that once Peres and Arafat meet face to face, such a restriction will be virtually impossible to enforce.

The Sharon-Peres understanding was not much of an opening, but Fischer resolved to try to widen it.

Officials on both sides cautioned against heightened expectations, though they need hardly have bothered. Previous attempts at diplomacy, including a purported cease-fire Peres personally worked out with Arafat last fall, have led nowhere.

Increasingly, a ghastly wisdom seems to be taking hold both here and abroad that the Palestinians’ “Al- Aksa Intifada” needs to shed more blood, cause more pain and poverty and further run its course before a diplomatic resolution is possible.

Peres has to contend not only with despairingly low expectation of success but with hostile criticism from within his own party.

The latest broadside came Monday, when former Prime Minister Ehud Barak publicly upbraided Peres for seeking to engage Arafat.

Intensive peace talks at Camp David last summer and thereafter proved that Arafat is no partner for peace, Barak contended, and anyone who fails to see this must be blind.

Barak recently broke a self-imposed silence since his defeat at the polls last winter and has been urging world leaders to shun Arafat as a “thug.” Merely talking to Arafat now weakens Israel in its efforts against him, Barak argued.

Peres hit back, recalling the magnitude of Barak’s electoral defeat to Sharon

Yossi Beilin, a leading Labor dove who recently mounted his own unsuccessful effort to convene an international peace conference in Madrid, said Barak’s criticism was “incomprehensible” given that Barak continued to negotiate with the Palestinians on a package of far-reaching Israeli concessions until the eve of elections, months after the intifada began.

Beyond the verbal sparring, the arguments highlight a basic fault line within the peace camp. It runs between those like Peres and Beilin who still believe in negotiating with Arafat, and those like Knesset member Haim Ramon and Center Party leader Dan Meridor, who believe Israel must act unilaterally to end the violence or at least to better contain it.

In his speech to the kibbutz movement leadership, Barak pointedly noted that he was the father of the “unilateral separation” concept.

Indeed, it was Barak who, as premier, coined the saying, “We are here and they are there,” trying to persuade the Israeli public that it must forfeit the dream of “Greater Israel” in favor of the pre-state principle of partitioning the Land of Israel into viable Jewish and Arab states.

Barak claims that his intention was to test Arafat by making him a most generous offer, one that met virtually all Palestinian demands short of allowing millions of Palestinian refugees and their descendants to return to homes they had abandoned within Israel during the 1948 War of Independence.

If Arafat accepted, well and good. But if he rejected Israel’s condition to declare an end to the conflict, then Arafat would be “exposed in his true colors,” Barak said.

This is precisely what happened, Barak contends, resulting in Arafat’s resort to violence beginning in late September.

Increasingly, politicians across a wide spectrum are adopting the logic of the Barak thesis, arguing that no deal can be negotiated in the foreseeable future and that Israel now must unilaterally redeploy its troops and move settlements.

Public opinion is not entirely in favor of unilateralism, however. A sizable segment of the population and the political echelon fears that if Israel withdraws from settlements without an agreement, it will in effect be offering a “prize” for Palestinian violence, encouraging their belief that continued attacks will lead to further Israeli concessions.

In addition, since all but the most extreme advocates of withdrawal recommend that Israel retain some important West Bank settlements and key security areas such as the Jordan Valley, some argue that a unilateral move will fail to remove a source of conflict or swing world opinion to Israel’s side.

On the Likud side, a key voice advocating the unilateral option is Knesset member Michael Eitan.

Meridor, who this week led his party into the Sharon government and himself joined the inner security cabinet, also favors the unilateral approach. He was at Barak’s side at Camp David and came away profoundly disenchanted with Arafat.

Sharon is fully aware of Meridor’s views and disagrees with the unilateral separation approach, but still was pleased by the Center Party’s decision to join the coalition.

“I want him at my side,” the premier said of Meridor.

Even in Peres’ circle, the word is that unilateralism, in one form or another, will have to be seriously contemplated if the foreign minister’s best-laid diplomatic plans again run up against Palestinian recalcitrance.

A unilateral withdrawal is not the preferred option, a key aide explained this week — but it could yet be adopted as the only viable alternative to unending bloodshed.

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