ON the outskirts of a sprawling Palestinian refugee camp in the West Bank, Israeli soldiers and Arab youths are winding up a day of intermittent skirmishes, one of the most violent in weeks. Inside the camp, against a backdrop of distant Israeli Army gunfire, Jamal, an unemployed teacher, reacts philosophically.
``This is just a preview of things to come,'' he says wearily, as if he has seen it all too many times before. ``As long as the Israeli government was split, we had hopes for peace. But the new government is a government of war. It will be more extreme and that will lead to more extremity on the Palestinian side. Now, the struggle will take a different course.''
Jamal is not the only prophet of gloom in Israel's two occupied territories, the West Bank and Gaza Strip. Following the installation this week of Israel's most right-wing government ever, Palestinians are reacting with a mixture of fear and hostility toward both Israel and its principal benefactor, the United States.
``We are slowly, the two of us, sinking into quicksand,'' says a leading West Bank Palestinian, referring to Israelis and Palestinians.
Palestinians now warn that the expected hard-line policies of the new government of Prime Minister Yitzhak Shamir could, by ending hopes for a peace settlement, lead to more bloodshed and a dangerous escalation of racially and religiously motivated violence by both sides.
In an interview this week, a prominent Palestinian activist described the ``cycle of deterioration'' set in motion by the apparent collapse of the peace process.
``With the failure of [Labor Party leader Shimon] Peres to form a government, things began to change in the Palestinian community,'' says the activist, who asked not to be named. ``It made people realize that hopes pinned on the peace process were totally undermined. Therefore the wait-and-see attitude that kept the uprising on low-burn during the last year has ended in producing an upsurge in intifadah [uprising] violence.''
The activist was one of 25 prominent Palestinian figures who embarked on a week-long hunger strike following the May 20 killing of seven Palestinians by an apparently deranged Israeli gunman near Tel Aviv.
But following the rejection by the US of a United Nations' plan to send an investigating team to the territories, and more recently the establishment of Israel's new hard-line government, such peaceful tactics of protest have become an anachronism, he says, ``something out of context.''
``Two years ago Palestinian leaders could stand up and say this is a white [non-violent] intifadah and have the support of the masses. Now [that position] has no support. Instead, people are reading booklets on how to make bombs at home.''
In the last three weeks, attacks by Palestinians on Jewish targets have intensified - capped by the bombing of a market in West Jerusalem May 28 that left one Jewish shopper dead - even as Israel has rejected compromises to advance the peace process.
The ``dialectic of escalation,'' is at work on both sides, the activist says. ``Shamir starts the cycle of deterioration, leading to terrorist attacks on one side and the `Sharonization' of the Israeli government on the other,'' he says, referring to Ariel Sharon. An advocate of Draconian measures to quell the uprising, Mr. Sharon is one of several ultra right-wing figures who hold dominant positions in the new government.
``More action on the part of the government will provide a reaction from a community already in a combustible state,'' the activist says. ``It is a dance of death that could quite possibly lead to war.''
The most worrisome change, says the activist, is that the Israeli- Palestinian conflict is devolving into a ``racial-religious war.''
``Until now, this has been a national conflict. Now, more and more, there's a darker side. After a consummate effort and sacrifice by Palestinians, after all this, Israel's response is a slap in the face. So the normal human reaction is to say, this is not a normal enemy, these are not normal human beings. So people are finding other explanations in religion. What makes him my enemy, they're saying, is that he is a Jew.''
If the activist is right, say analysts, the intifadah could well be entering a new and dangerous phase.
Palestinian leaders also speak of a serious deterioration of relations with the US following the UN debate over sending a team to investigate ways to protect Palestinians under occupation.
After hinting that it might support the idea, the Bush administration backed down, creating a sense of betrayal in the territories and prompting Palestinian leaders in the West Bank to suspend contact with US diplomats in Jerusalem.
``This was an acid test of where America stood,'' says the activist. ``After the UN veto, America no longer has any credibility as a peace mediator.''
More worrisome to the Palestinians is the imminent prospect that the US will cut off its 18-month dialogue with the Palestine Liberation Organization in response to the May 30 PLO terrorist attack. The US insists that the attack, masterminded by a member of the PLO executive council, violates a December 1988 pledge to renounce terrorism. Palestinians, who condemn attacks on civilians, say the end of the dialogue confirms the end of the peace process.
``At a time when [South Africa] lifts the state of emergency, when the Warsaw Pact turns political, comes a government of Israel with a prime minister saying, `By the sword we shall live,''' says Palestinian Prof. Saeb Erakat. ``Days later the US administration rewards it with the decision to break off ties with the PLO. Don't you think we have to be honest with our people? Don't you think we have to say its useless to talk to the Americans?''
``The only interest the US has in this area is Palestinian moderates and the US is about to order their execution,'' says Professor Erakat, who adds that trying to make peace without the PLO is ``like trying to grow cotton in Alaska in January.''
Shamir appeared to put peace talks completely out of reach this week by demanding that they be linked to peace talks with Arab countries, none of which, except Egypt, recognizes Israel.
In a Jerusalem Post interview scheduled for today, Shamir also said negotiations would be conducted only with Palestinians who will settle for Camp David-style autonomy for the occupied territories - none of whom are known to exist, most analysts agree.
``There is nothing to discuss with those among the Palestinian-Arab circles who are opposed to autonomy,'' Shamir said.
Shamir's demands spell ``the end of the peace process,'' Shimon Peres told the Post.