A drop in Israeli-Palestinian violence to its lowest level in 15 months is fueling US and European optimism about reaching a cease-fire.
But there is a huge gap between foreign perceptions of the potential for progress and Israeli views, especially after Israel's seizure of a boat, the Karine A, carrying 50 tons of munitions that it says originated in Iran and were on route to the Palestinian Authority (PA).
Prime Minister Ariel Sharon is arguing that the ship's seizure proves the PA is preparing for war even as it speaks of a cease-fire. And his spokesman, Raanan Gissin, says the government "will be assessing policy in all aspects - political, diplomatic, and military toward the Palestinian Authority" in light of the boat's capture.
"When Arafat gave the instructions to purchase the firearms for the ship, he made a strategic choice to bring about regional deterioration that would lead to war," Mr. Sharon said Sunday, after Katyusha rockets, antitank weaponry, and mines were displayed in what journalists said was a festive atmosphere.
Sharon cited the seizure of the ship as proof that he was right to veto a peace initiative last month by which President Moshe Katsav would have addressed Palestinian legislators in Ramallah.
But the episode has not, at least thus far, made the ripple against the PA Israel hoped for in terms of international opinion, in part because Israel has not furnished proof of its allegations of involvement by Palestinian leader Yasser Arafat and has not as yet received clear public US endorsement for its charges.
The captain of the ship, Omar Akawi, a former officer in the Palestinian naval police, said in an interview from his prison in Ashkelon - shown on Israeli television - that he had received his instructions for the journey from a Palestine Liberation Organization representative in Athens.
The PA has denied involvement but has offered to conduct an investigation with US and Israeli participation.
US envoy Anthony Zinni was careful not to let the seizure in the Red Sea, 300 miles from Israeli waters, disrupt his cease-fire efforts. He ended his second visit to the region Sunday by saying that there are "serious challenges" but also "real opportunities for progress."
But domestically the impact has been significant. The ship is becoming a symbol of Palestinian perfidy and threatening intentions well beyond the 50 tons of munitions on board. Analysts say it is offering a major boost to Sharon's argument that the PA is not a partner for negotiations and that Mr. Arafat is "irrelevant" in the words of an Israeli cabinet decision, analysts say.
"It's a gift for Sharon that fell from the sea, not the sky. He has the chance here for massive support for his arguments that there is no one to talk to," says Reuven Pedhatzur, a Tel Aviv University political scientist.
Mr. Pedhatzur predicts that if the current quiet is shattered and there is a Palestinian attack, the weapons smuggling will make it easier for the government to embark on wide-ranging strikes against the PA.
Yediot Ahronot, the largest circulation daily, wrote in an editorial yesterday that "with his own hands Arafat has destroyed what he needed to strengthen: Israeli belief in peace, without which there is no hope for his own people."
And Egypt, the PA's main ally, is also deeply concerned about the incident. "If it is proven beyond a doubt that the weapons boat is tied to the Palestinian Authority or that this was done with the knowledge of the PA, it will be a big blow to the peace process," said Osama al-Baz, adviser to President Hosni Mubarak.
The controversy over the ship comes amid assessments that "things are definitely improving on the ground," in the words of a European diplomat. There have been no Israeli fatalities in 24 days, the longest stretch since the uprising began and there was one Palestinian fatality last week.
"Our main concern is that the progress should be built upon and that [the ship incident] should not derail Zinni's mission," said the diplomat.
The drop-off comes in the wake of a Dec. 16 cease-fire call by Arafat, but Sharon's spokesman, Mr. Gissin, says the credit for it belongs to Israeli security measures, not the PA leaders. The boat, he says, is proof that "the PA has stepped up its terror campaign and aligned itself with the most dangerous terrorist centers in the Middle East."
But Pedhatzur, the political scientist, says Sharon's handling of the boat episode must be seen within the context of an overall strategy of avoiding negotiations and resultant concessions on Jewish settlements in the West Bank and Gaza Strip. "He wants the status quo to continue. He does not want to give up any territory or to dismantle any settlement."
Pedhatzur argues that Sharon's stipulation that there be seven days of complete calm as a prerequisite to negotiations is a deliberate nonstarter that gives a veto over the convening of talks to "any lunatic with a gun." The key question, he says, is to what extent the US will push Sharon toward a cease-fire.
Yaron Ezrachi, a Hebrew University political scientist, said that as an Israeli citizen, he was relieved that the weapons had been stopped. But he took issue with the repeated use of the word terrorism to describe the smuggling.
During Israel's establishment in 1948, he said, it was the right-wing Zionist organizations, which evolved into today's Likud party, that used a ship, the Altalena, to try to smuggle weapons into the country during a truce.
"They have always treated this as one of the most heroic chapters in their history, not as terrorism," Ezrachi said.