Gwynne Dyer: Light in Middle East tunnel

Can the old war criminal really want to end his political career by making peace with the Palestinians?

Israeli Prime Minister Ariel Sharon has broken with the hard-right Likud Party that he helped to found three decades ago and is starting a new centrist party that will, he says, negotiate a peace deal with the Palestinians. Has the Age of Miracles returned?

No. Sharon is only quitting Likud because it became clear that he would lose the party leadership next year to his old rival Binyamin Netanyahu. Too many of Likud's settler supporters are still outraged by his evacuation of the Gaza Strip last summer.

The peace deal that his new party would offer the Palestinians is no better than the one he offered as head of Likud. He still intends to keep much of the occupied West Bank permanently.

Nevertheless, something big has changed in Israel.

Sharon did not choose the timing of his dramatic moves. They were forced on him by the newly chosen leader of the Labour Party, Amir Peretz, who promptly pulled out of the Likud-Labour coalition through which Sharon has governed Israel.

It is Peretz who is setting the agenda for the election that is due in late February or early March, and his agenda is genuinely about peace.

Peretz does not pull his punches. Israel's poor have done so badly for the past several decades, he says, mainly because so much public money has been wasted on the Jewish settlements in the West Bank and the Gaza Strip.

And despite the past five years of violence, he has never wavered in his conviction that Israel must make peace with the Palestinians.

Not just a Sharon-style imposed peace, either, with Palestinians corralled in more or less self-governing cantons whose borders are defined by Israeli security concerns and settler land-grabs.

Peretz believes that the Palestinians must have a real state with enough land and power that they actually have something to lose.

He supports Israeli withdrawal right back to the 1967 borders, and is contemptuous of Sharon's too-little-too-late withdrawal from the Gaza Strip. It is as if Yitzhak Rabin had come back to life.

It is 10 years since an extreme right-wing Jewish fanatic assassinated Rabin, the Prime Minister who agreed to negotiate a peace settlement with the late Palestinian leader, Yasser Arafat.

Rabin, a tough former general, was murdered because he was willing to let the Palestinians have their own state in the occupied territories in return for a permanent peace - and the brutally ironic result was that Israel has been ruled for most of the time since by two Likud leaders, Sharon and Netanyahu, who never truly accepted Rabin's goal.

They had to give it lip-service, since the rest of the world, and most important the United States, supported it.

But in practice they sabotaged every peace initiative and went on expanding the settlements to establish Jewish "facts" on Palestinian land. The Israeli population of the occupied territories has more than doubled in the past decade.

And for most of that decade Rabin's Labour Party was led by Shimon Peres, now 82, who moved it sharply to the right on economic issues and took it into coalitions with Likud, where it merely echoed Sharon's policies.

Now Peretz, a trade union leader who grew up in poverty after emigrating from Morocco, is taking Labour back to its left-wing roots on domestic policies like social welfare, which is likely to bring many former Labour voters back to their old loyalties.

On peace with the Palestinians, he could not be clearer. Standing by Rabin's grave two weeks ago, he said: "We will not rest until we reach a permanent agreement that would secure a safe future for our children ... in a region where people lead a life of co-operation and not, God forbid, where blood is shed from time to time."

Peretz' rise comes at a good time. Sharon, the master manipulator whose specialty is wrecking any peace initiative that threatens his plans by goading Palestinian extremists into yet another atrocity, has lost control of Likud.

His proposed new centre party must fight an election in only three months, and it could easily be caught in the crossfire between a revived left-wing Labour and a hard-right Likud led by Netanyahu.

This could be the 77-year-old Sharon's last hurrah.

By a fortunate coincidence, the Palestinian parliamentary elections scheduled for 25 January will see the largest of the Islamist movements, Hamas, enter politics at the national level for the first time. Hamas still formally rejects any permanent peace with Israel, but in practice it will have to be part of any future negotiating process. That might transform both the nature of the process and Hamas's own views of what is possible.

There have been too many false dawns, but if you squeeze your eyes tight shut you can imagine that Yitzhak Rabin has risen from his grave and that the stupid and bloody waste of time and life over the past 10 years was just a long detour on the road to a Middle East peace.

Even now the enemies of peace on both sides are mobilising, but maybe there is a little hope.

* Gwynne Dyer is a London-based independent journalist whose articles are published in 45 countries.