There is still much to admire about the old Israeli ideal

'Yet all Israel's genius has been compromised by the West Bank settlements and denying Palestinians rights'

In mean streets, tanks look awesome. They can hit any target they identify; they can impose a rule of fire and fear. But for how long, and to what end? In the occupied West Bank, as soon as the tanks disappear around the corner, the mayhem resumes. The fear and fire turn into rage and counter-fire.

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In mean streets, tanks look awesome. They can hit any target they identify; they can impose a rule of fire and fear. But for how long, and to what end? In the occupied West Bank, as soon as the tanks disappear around the corner, the mayhem resumes. The fear and fire turn into rage and counter-fire.

After 11 September, there was much discussion of asymmetric warfare: the problem confronting the US in dealing with a terrorist enemy not subject to the vulnerabilities that a state would have to reckon with were it to wage war against America. Thus far, the Americans have been more successful in coping with asymmetric warfare than the pessimists fear, though plenty of difficulties still lie ahead. But the real example of intractability is to be found on the West Bank. Israel is a regional super power. In a conventional war, it should still be capable of defeating all its Arab foes. Yet the Israeli Goliath cannot deal with the Palestinian David.

The Israelis can impose any humiliation they wish on Yasser Arafat; they can turn Palestinian leader's house into a cross between a ruin and an Israeli barracks. Yet what good does it do? They could even kill him (and given that standards in the Israeli defence forces are not what they were, this could happen by accident). But what good would that do?

It does not matter how much the Israelis can intimidate the Palestinians; this will not bring victory. It would not even matter if the Israelis were able to crush the current intifada, though that seems unlikely. They would merely be postponing the problem until the next intifada. Power alone cannot bring peace, any more than might can be transmuted into right. At some stage, the Israelis will have to stop thinking with their tank rounds and try using their brains.

The irony is that this should not be difficult. Five yards from the microphones, five minutes after being appalled by the latest atrocity, a surprising amount of common ground could be found even among those who appear to hate each other. These days, most Israelis will admit that the Palestinians must have a state – though many of them are still some way from agreeing to a state that Palestinians would recognise as such. Equally, and however they may mouth off when they are excited, most sensible Arabs – and Palestinians – will acknowledge that Israel is not going to disappear. Put those two positions together, and the combination can be summarised in three words that have long been the inescapable basis of any settlement: land for peace.

The Israelis require a security guarantee, accepted by their Arab neighbours and by the Palestinians, and underwritten by the Americans. The Palestinians require a state which looks like a state on the map, rather than an agglomeration of cantons nestling uneasily between Israeli security checkpoints and Jewish settlements. This would mean that many of the existing Jewish settlements would have to be evacuated, though a deal should be possible over those which are, in effect, suburbs of Jerusalem.

All this would mean painful concessions by both sides. Palestinians would have to renounce the fantasy of a right of return to Israel by the 1948 refugees and their descendants; no more vexing visitors' patience by maundering on about grandfathers' stolen olive groves near Haifa. Israelis would have to find the testicular fortitude to force settlers who should never have been allowed to settle from settlements which should never have been built. "Force" might be the operative word; some settlers, quite as irrational and fanatically fundamentalists as almost anyone in the Arab world, are fully capable of opening fire on the Israeli army.

During the Israeli occupation, a couple of hundred hardy souls settled in Sinai. Before the hand back to Egypt, they had to be evacuated, and some resisted, though not with guns. All this upset a lot of Israelis, even though the numbers were small and Sinai had never been regarded as part of historic Israel. The displacement of the West Bank settlers would be much harder.

Yet there is no alternative. One could agonise indefinitely over the rights and wrongs of the creation of the state of Israel. The counter-arguments proceed on parallel lines, with no possibility of convergence this side of infinity. On one point, however, there might be some hope of a pragmatic compromise. Over the past 50 years, the Israelis have not only altered the facts on the ground, rendering the 1948 arguments irrelevant. They have created a most successful society that has many lessons to teach its Arab neighbours and whose principal strength was not foreign economic assistance, but the relentless application of intelligence and toil in an unpromising landscape. In private, many more Arabs will recognise this than would ever be prepared to do so in public.

Yet Israel's genius has been compromised by the West Bank settlements, which inevitably involve the suppression of Palestinian rights. Some of the settlers have taken Israel a long way from the dreams and ideals of its founding fathers. They have enabled some of the worst, most extreme, elements of Israeli society to have far too much influence over its political process. Above all, they risk locking Israel into an unending conflict with its neighbours in which there will be no hope of stability or security.

The Israelis have been able to win a great deal of sympathy in Washington – and elsewhere – because of terrorist outrages. But it is not enough to condemn terrorism. As long as a nation is denied nationhood while its population is denied democracy and the rule of law, that population will live in terror-genic conditions. In those circumstances, condemnation will be of as little use against terrorists as tanks are.

I had the pleasure of visiting Israel during its 50th anniversary celebrations. Exhibition after exhibition contrasted the austerities of frontier life in the late Forties with the achievements of the intervening five decades, which turned villages into cities and which have made the desert bloom.

From time to time, I felt it necessary to enter a note of dissent. "You are so proud of all you have done to build up this nation, and rightly so," I would say to Israelis: "When will the Palestinians be able to be proud of the way in which they have built up their nation?"

I never received a satisfactory answer. Yet the question will not go away. Indeed, it will determine the way in which Israel evolves between its 50th and 100th Anniversaries. It is possible that a deal could be struck which, while not eradicating terrorism, would give the Israelis the opportunity to live in harmony with their neighbours – and even to help those neighbours to develop economically and socially.

But it may be that there will be no peace. If that were to occur, the future could be bleak indeed, for Israel, for the entire region and for the rest of the world. It is in all our interests that the Israelis' celebration of their 100th Anniversary should be a joyous and peaceful occasion. On present trends, however, that is by no means certain.