President Bill Clinton's failed attempt to force through an agreement between Israel and the Palestinians at Camp David continues to reverberate throughout the Middle East.

The collapse of the summit last month has strengthened the political opposition facing Ehud Barak, Israel's Labour prime minister, and Yassir Arafat, chairman of the Palestinian Authority. The US was relying on the two leaders in its efforts to end the 52-year Arab-Israeli conflict. A volatile political situation has been created that could set Israel and the Palestinians on a collision course and destabilise other Arab bourgeois regimes.

Clinton has backed Barak and Arafat against Israel's right-wing Likud Party and the Islamic fundamentalists of Hamas, both of which are opposed to negotiations. But Barak and Arafat's political survival has been thrown into question. Since the collapse of the talks, there have been intense diplomatic efforts by all sides to gain international support for their positions.

Dennis Ross, the US Middle East envoy, has returned to Jerusalem to seek some form of compromise over the Holy Places on Jerusalem's Temple Mount/Haram al-Sharif. US Secretary of State Madeleine Albright is expected to follow. Israel's new foreign minister, Shlomo Ben Ami, held talks with Palestinian officials earlier this week. The political exigencies facing all three leaders mean they must resume talks and sign an agreement within the next few weeks, if violence is to be avoided.

With the date for the establishment of a Palestinian state as laid down in the 1993 Oslo Accord long since passed, Arafat announced that he would declare his state with or without an agreement on September 13. Israel's response was to say that it would annexe the Zionist settlements and close the roads to the Occupied Territories, in effect abrogating the “land for peace” deals of the last seven years.

From its inception Clinton has sought to use the “land for peace” process to safeguard US hegemony in the Middle East and the interests of its Israeli client state. European powers such as France have sought to counter the US by openly backing Arafat's proposed declaration of statehood in order to bolster his position against Israel.

Clinton convened the recent Camp David summit in an attempt to prevent Arafat's unilateral declaration being implemented. The talks attempted to resolve all outstanding issues prior to final independence for a form of Palestinian state, including borders, the fate of 200 Zionist settlements in the Occupied Territories, Israel's security arrangements, the right of return of 3.6 million Palestinian refugees and the status of Jerusalem.

Arafat was prepared to accept a Palestinian state consisting of blocks of non-contiguous land in the West Bank and Gaza, criss-crossed by high security Israeli-controlled highways connecting the Zionist settlements. The West Bank and Gaza would be linked by two roads, which could be closed at any time by Israel. The new state would occupy less than 90 percent of the territory seized by Israel in the June 1967 war, and just 22 percent of the land comprising the state of Palestine in 1947.

Arafat's willingness to abandon the Palestinians' right of return confirms that the fate of the masses counts for nothing when measured against the class interests of the Palestinian bourgeoisie. The new state would provide a home for less than half the Palestinian population. Less than 100,000 refugees would be allowed to join their families in Israel and Palestine. The rest would have to make do with promises of compensation from a yet to be established international fund and dispersion to other Arab countries.

The talks foundered on the issue of Jerusalem, which both Israel and Palestine claim as their capital. Barak refused to return Arab East Jerusalem, captured in 1967, to Palestinian rule. Instead, he offered control of some outlying Arab neighbourhoods and limited custodial rights to the Muslim holy places, with access through underground tunnels. Arafat could not agree to relinquishing control of Islam's third holiest site, as it would have acted as a rallying point for growing opposition to his concessions to Israel. Since Israel's humiliating defeat and forced evacuation from Lebanon there has been a growth of militant anti-Israeli sentiment amongst the Arab masses expressed in numerous protests and demonstrations. A recent opinion poll showed that two thirds of Palestinians, the most in six years, support violence against Israel. Hamas leader Sheikh Ahmed Yassin has called for a renewed intifada.

Without concessions from Israel on East Jerusalem, Arafat was in danger of losing his already tenuous grip on the Palestinian leadership. Moreover, Egyptian President Hosni Mubarak, Arafat's main backer, urged him to reject the proposed settlement, fearing that the loss of East Jerusalem would inflame social and political tensions throughout the Middle East.

Since then, Arafat has been forced to walk a political tightrope. His legitimacy as a leader is based on his promise to secure independence through a negotiated settlement with Israel, backed with US dollars that would resolve the social and economic difficulties of the Palestinians. But his efforts to secure such an agreement demand concessions on the key issues that jeopardise his leadership. His dilemma was made worse by the heavy-handed stance of the US. In the aftermath of Camp David, Clinton blamed Arafat for the talks failure and even said he was considering moving the American Embassy from Tel Aviv to Jerusalem.

Arafat spent weeks talking tough on his threat to unilaterally declare a state, while having little choice other than an eventual climbdown. He announced Wednesday that he will postpone his declaration of statehood and that another summit in the US is likely soon. This followed a world tour to drum up support, during which Russian, Chinese and European leaders urged him to continue to seek a negotiated settlement.

He was no more successful in gaining support from the Arab leaders. According to a Palestinian official, Arafat “did not manage to obtain either an Arab summit or an Islamic summit or even firm Arab and Islamic support.” Egyptian President Hosni Mubarak said, “I believe the delay may take place. We don't want any clashes between the two sides.” He also received a rebuff from Iran when he attempted to limit their support for Hamas and Islamic Jihad. Only a low ranking official was sent to greet him at the airport.

Barak isolated

At a military college graduation ceremony on Thursday, Barak responded to Arafat's difficulties by offering the Palestinians an independent state if they formally end their conflict with Israel. Hitherto circumspect on the question of independence, he promised, “If the Palestinian leadership is prepared to confront the challenge of setting up a Palestinian state and solving the hardships of its people, it must understand that a condition for that is ending the conflict with Israel.” The stick accompanying this carrot was his warning that a unilateral declaration of statehood would “hurt, first and foremost, the Palestinians themselves”. He stopped short only of outlining the retaliatory measures Israel would take.

Barak's own position is, if anything, more precarious than Arafat's. After coming to power in May 1999 on a popular mandate to reach an agreement with the Palestinians, he has seen his coalition government disintegrate. He was deserted by many of the smaller parties that made up his government before he went to Camp David. His Foreign Minister, David Levy, refused to join him for the talks and subsequently resigned, urging Barak to form a National Unity Government with Likud.

Since Camp David, Likud has begun the process for the dissolution of the Knesset (parliament) and new elections. The first bill received 61 votes in favour from the 120-member parliament. Given the parliamentary recess until the end of October, Barak has probably less than three months left in office in which he must secure an agreement.

Opinion polls show that 56 percent of the Israeli public now believe that Barak is not credible. Just 43 percent would support him in an election compared with 39 percent for Ariel Sharon, the leader of Likud who bore direct responsibility for the massacre of Palestinians in the Beirut refugee camps of Sabra and Chatilla in 1982. In a race with Netanyahu, whom he defeated in last year's elections, he would lose outright. On July 31, the Knesset voted Likud deputy Moshe Katzav as Israel's new president, defeating the Labour candidate, former Prime Minister Shimon Peres. Political scientist Yohanan Peres of Tel Aviv University commented, “No Israeli government facing such decisive choices has ever been in such a weak position in parliament, and the result is a real paralysis of the democratic system.”

A major reason for the growing disillusionment with Barak is that unemployment is over 10 percent. In the wake of Israel's agreements with her Arab neighbours, many Israelis have lost their jobs as a result of enterprises seeking cheap labour and low taxes by relocating to the Palestinian Authority, Jordan and Egypt. Many more live in fear of losing their jobs as the government presses ahead with its privatisation plans, wage reductions and cutbacks in public spending. This has enabled the right wing to whip up nationalist opposition to a final Israeli-Palestinian accord.