In the run up to Secretary of State Madeleine Albright's first peacemaking trip to the Mideast, Israeli Prime Minister Benjamin Netanyahu's steady rhetoric - along with the recent bombings in Jerusalem - have ensured that Israel's security concerns will top the agenda.
The loss of a dozen naval commandos Friday during a raid on militant Islamists north of the zone that Israel occupies in Southern Lebanon - the heaviest toll since Israel's 1982 invasion - proved a stark reminder of another simmering hot spot.
Palestinian extremists, analysts say, are dictating the level of acrimony that overshadows the failing peace process, and they appear closer than ever to their goal of destroying the remnants of the 1993 Oslo peace accord.
But Israel's tough collective punishments are also to blame for breeding terrorism, they say. The measures have cost Palestinian leader Yasser Arafat heavily in cash and support and emboldened antipeace extremists.
"Terrorism does not grow in a vacuum," says Ariel Merari, an expert on political violence at Tel Aviv University. "Surely you must fight terrorism and take measures to prevent it. But ... you can't rely on police - the answer is in the political domain."
In keeping with Mr. Netanyahu's current focus on terrorism, however, a tough approach - including sealing off Palestinian territories and stopping repayment of tax revenues - has won wide support in Israel.
In the aftermath of last week's bombing, Netanyahu said Israel "cannot continue with the diplomatic process as is.... We had given Arafat and the Palestinian Authority a chance, and they had failed abysmally. The time has come for us to draw the proper conclusion." After a Cabinet meeting Friday, he said he would freeze any West Bank troop withdrawl.
But some analysts say that this policy is shortsighted and appears designed to undermine Mr. Arafat - though no more moderate alternative appears capable of making the kind of peace-table concessions to Israel that he can.
Each day, for example, Israel's right-wing government analyzes everything that Arafat says and does.
The official line is that Arafat has done "nothing" to halt violence and some hard-liners privately suggest that he has done "less than zero" - meaning that he may himself be behind the suicide bombings of July 30 and last Thursday in Jerusalem, in which a total of 19 civilians were killed.
But Palestinian officials say they have made a "more than 100 percent effort" to break up the infrastructure of the Islamic resistance movement, Hamas, which opposes the peace process and claims responsibility for last week's bombings.
Emphasis on the daily grade, they say, indicates that Netanyahu may be "missing the forest for the trees" when dealing with Arafat and with Palestinian militants.
The tough Israeli reaction to the bombs has been predictable, but Palestinians say it will only breed more terrorism.
Despite Israeli claims that Arafat has "not lifted a finger" against terrorists, Palestinian officials provide a list that details the discovery of two secret explosive factories, numerous arrests of Hamas and Islamic Jihad activists, and confiscation of bomb material and weapons.
They say they would conduct a wider crackdown if Israel provided specific charges, but have ruled out mass arrests similar to those carried out a year ago.
Experts from both sides insist that it is virtually impossible to stop determined suicide bombers. But undeterred, Netanyahu has turned terrorism - and recent moves by Arafat's Palestinian Authority to publicly embrace the extremist Hamas leadership - into the only issue upon which the entire peace process hangs.
"Netanyahu is a propaganda master with a naive, shortsighted policy," says Alon Liel, a former Israeli diplomat who is now foreign affairs advisor to opposition leader Ehud Barak. "He doesn't analyze anything, he just gives you the answer, 100 times with a hammer on your head, that the Palestinians are doing zero.
"This is a tactic," Mr. Liel says, "But the problem is that the propaganda tactic is the policy. At the moment he has convinced the public, but he has killed any credibility with the Palestinians. It is difficult to tell them, morning to evening, 'You are terrorists,' and expect them to trust you."
Pressures on Arafat are heavy, and many say they are misunderstood by Netanyahu and his ruling right-wing coalition. Arafat has presided over a growing disillusionment with the process, and an estimated 40 percent drop in the standard of living for Palestinians since Oslo.
The current round of closures began July 30, with the Authority losing an estimated $8 million each day.
Early in the process, the overwhelming majority of Palestinians supported the "land for peace" formula, and that support helped keep extremist violence in check. But today, Palestinians are aggrieved that Israel is building new settlements and establishing "facts on the ground," which they say prejudice future land deals. Netanyahu has reluctantly agreed to continue with a peace process that he for years rejected, and has even come up with his own map for a future Palestinian entity.
The US Congress has also taken a tough line against Arafat, demanding mass arrests of "terrorists." The combined weight of pressure from the US and Israel has forced the Palestinian leader to rebel against such "dictates," and to open his arms to extremists for "unity."
"The only two powers are Arafat and the Islamists," says Mahmoud al-Zahar, a Hamas leader in Gaza City. "With the political failure of Arafat, people look for an alternative. Hamas is present in every house, so if you touch Hamas deeply, you will touch Palestinian society deeply."
Palestinians in Gaza and the West Bank, however, are largely horrified at the terror bombings in Jerusalem - and are especially unhappy with the closures.
"What is lacking has been the ability of this [Israeli] government to step into Palestinian shoes and feel what they are feeling. This explains a lot of the damage," says Joseph Alpher, a strategic analyst and director of the American Jewish Committee in Jerusalem.
"Israel and the US say there is no parallel between bombs and bulldozers, but Palestinians see bulldozers as aggression, as taking their land," he says. "They can't use bulldozers, so they respond with alternative ways of violence."
Palestinians say that while suicide bombs bring immediate worldwide condemnation of terrorist acts - and make a tool for Israeli propaganda - Israeli building on Arab land occupied during the 1967 war rarely elicits such a visceral response.
Their hopes for an independent state seem more and more distant, and abuses of power by Arafat's myriad security services and widespread corruption that last year cost $326 million add to their woes.
"Netanyahu has brought out the worst [in] Arafat," says an Israeli analyst who asked not to be named. "Does he want to bury this peace process and blame it on Arafat, which is where we are going? Or does he just want to do it on his own terms?"