The two-term American president is entering the final months of his time in office, and hopes desperately to mark his departure by fostering a breakthrough agreement on the intractable Israeli-Palestinian conflict. His secretary of state is dispatched to organize a summit meeting which he will host, and at which he intends to chivy the two sides toward a deal. The Israeli prime minister is declaring a readiness to make painful concessions, including the dismantling of most settlements, and to discuss every disputed issue in an effort to achieve such a deal, even as his coalition partners show growing signs of discomfort and the opposition claims he is misguided, inexperienced and lacks a public mandate for far-reaching compromise. The Palestinian leadership has made plain its deep dismay at the accelerated pace with which the summit has been arranged, complaining at the lack of preparation, complaining that it is not ready, complaining that the mood among its public is too radicalized to contemplate compromise. Practically, it has failed to take even the most elementary steps toward preparing its people for the concessions necessary for real progress. Terrorists opposed to the very idea of negotiating with Israel are stepping up their attacks, meanwhile, and vowing to carry out more should any substantive diplomatic process actually get under way. So it was at Camp David in 2000. And so it is again, seven years later, as Annapolis looms. Except that back then, in the dwindling days of the Clinton administration, the sides were hosted by a president who had spent years obsessing about our conflict, intimately understood its complexities and was respected by both sides for his knowledge and commitment. Whereas today there is a president who has come late to Middle East peacemaking, invested no remotely comparable personal effort in learning to understand and win over the direct players, and would thus be incapable of overseeing the kind of sustained effort at top-level negotiations supervised by Clinton at Camp David. And except that the Palestinian leader who came to Camp David, Yasser Arafat, enjoyed sufficient authority and credibility to have implemented an agreement were one to have been reached, whereas his successor, Mahmoud Abbas, can no longer even claim to control the Gaza Strip, has lost part of his West Bank authority to Hamas as well, is unable to rein in the extremists of his own Fatah party and, as is publicly acknowledged by his own prime minister, is quite incapable of ensuring even interim security calm in Palestinian-controlled areas. Of course, Arafat chose not to accept viable peace terms anyway, but talks with him were a case of hoping for statesmanship from a widely supported leader; talking to Abbas is a case of hoping both for his statesmanship and for his ability to regenerate lost support. NOT ALL the portents for Annapolis are worse than those that spelled the failure of the Clinton administration's eleventh-hour effort at peacemaking. Those who have spent time with Abbas and Palestinian Authority Prime Minister Salaam Fayad insist that they do both genuinely seek a two-state solution and understand the compromises necessary to achieve it on terms that are viable for Israel. If Abbas is perceived by his interlocutors as "the benign last vestige of the old regime," as one prominent interlocutor put it to me this week, then Fayad is regarded as a sober, worldly and professional leader of a standard quite unlike any previous Palestinian politician. On the Israeli side, Olmert's coalition may be shaking, but it is not yet collapsing and, unlike Barak in 2000, he has not staked everything on success at the summit. Indeed, the gradual scaling down of expectations for Annapolis means that Olmert's more rightist partners are not regarding it as a moment of truth, and seem ready to give him room to enter post-summit negotiations. Even before Annapolis, meanwhile, the indefatigable Quartet envoy Tony Blair is attempting to rekindle the notion that moderation fuels economic growth, this week announcing the green-lighting of three projects in the West Bank and one in Gaza intended to provide thousands of jobs for Palestinians - the intended first economic "dividend" of a return to the negotiating table. There is some hope, too, that the threat posed by the would-be nuclear Iran, though felt most keenly by Israel, might serve to focus Arab minds and foster a more conciliatory attitude to Israel. BUT SUCH sources of relative optimism are dwarfed by the central, abiding causes for concern. Seven years ago, 200,000 Palestinians were working in Israel and tens of thousands of Israelis were going shopping in the cheaper West Bank; Israelis were even going to Palestinian dentists. Yet even the combination of direct, tangible economic benefit and the banal, stereotype-demolishing interaction of ordinary Israelis and Palestinians proved insufficient to persuade Arafat that the time had come for peace. Neither, notably, despite the public criticisms of some of Arafat's own advisers that he had passed up viable terms for an accord, did it leave the mainstream Palestinian public furiously condemning him for his failure. The successor leadership may be better-intentioned, but the Palestinian public is more extreme than it was seven years ago, to the point that Abbas and Fayad, whether willing or not, have proved unable to spell out the need for compromise on issues as central as the refugee "right of return." That Secretary of State Condoleezza Rice believed, in the earlier Annapolis planning stages, that it might be possible to make dramatic progress on this and other core final-status issues in the weeks preceding the summit is dismaying testament to American misassessment of the Palestinian mood and the room for maneuver of its leadership. Next week, Annapolis week, happens to mark the 60th anniversary of United Nations Security Council Resolution 181, which provided for the partition of British mandatory Palestine into "Independent Arab and Jewish States." Those who spoke for the directly affected Arab residents at the time vehemently rejected this division and set about ensuring that no Jewish state would be allowed to take root; failing in 1948, they chose not to suffice with what could have been a state of Palestine in East Jerusalem, the West Bank and the Gaza Strip, and lost the opportunity to unilaterally determine the destiny of those areas in 1967. Pressed in recent days by Olmert to acknowledge that what the UN mandated in 1947 has indeed come to pass over the six decades since, the establishment and development of the "Jewish state" of Israel, the Palestinian leadership is still balking - still either itself ideologically incapable of internalizing and legitimizing reality, or too scared to confront its own public with the fundamental starting point for an accommodation with Israel. Instead, like Arafat seven years ago, the Palestinians are reluctantly allowing themselves to be dragged by the Americans to new summitry, although, unlike Arafat seven years ago, they are determined to escape any blame for its failure. Arafat, post-Camp David, went on a world tour designed to persuade the international community of Israel's perfidy, with more success in this region than in the West. This time, as Abbas's political adviser Nimer Hammad told The Jerusalem Post's Khaled Abu Toameh on Wednesday, "we will go to the conference to present our positions regarding our rights and the final-status issues. We want to show the world which party is not interested in peace. We won't allow the Israelis this time to drag us into a situation where we will be condemned by the rest of the world." Dig a little deeper on the Palestinian side and you discern two distinct lines of thinking, neither of them yielding much hope for Annapolis - and this among the non-Islamists. Those around Fayad believe the summit is premature. Fatah is not reformed. The PA cannot provide effective security in the West Bank. The Palestinian public is in no mood for concessions, and even raising final-status issues is playing with fire. These voices are not talking about the need for a postponement of a few months, it should be stressed. They are talking about years - about the need to supplant whole generations raised on a diet of hatred and martyrdom. Which takes us to the second line of thinking - among Palestinians who discern a pattern of unilateral concession from Israel and see no incentive or imperative to compromise at all. Israel has left Gaza. It is talking about leaving all of the West Bank, albeit with settlement bloc adjustments. It is talking about unprecedented concessions in east Jerusalem. It is finding no answer to rocket attacks from Gaza and proved vulnerable to attack from south Lebanon. So why hurry, they ask, to compromise on the refugee issue and other maximalist demands? Why hurry when a two-state solution is so obviously an Israeli interest, and when the single, binational state which inertia might bring spells suicide for Israel? What would overcome both those mind-sets would be the development on the Palestinian side of a burning sense that they too have an imperative for reconciliation, that time is working against them, that they have much to lose by avoiding compromise and accommodation with Israel. And central to bolstering that way of thinking is the perception of Israel as confident and indestructible - willing to compromise for the cause of peace, but well able to hold firm if there is no genuine opportunity. Since a genuine accommodation is a prime Israeli goal, Israel, it need hardly be stated, has a vital interest in the creation of precisely this perception. Demographics are not working in our favor; the need for a blueprint of settlements deemed essential and the galvanizing of a consensus around what should and should not be retained has never been greater; the danger of the Islamists, and thus Iran, taking full of control of the West Bank is real and potentially imminent. It may be that, among some Palestinians, an imperative for reconciliation is indeed being felt, or even long existed. But the concern as the parties make their way to Annapolis is that even the dismal legacy of Arafat's rejectionism seven years ago - the bloodshed it unleashed; the day-to-day economic and other consequences as Israel sought to protect itself against the onslaught of terrorism - has not seen a consequent determination to shape a better reality rise to the fore among the Palestinian public. Put simply, the Abbas Palestinian leadership, whether or not it is truly moderate and ready to compromise, is not empowered by its public to work strenuously and wholeheartedly for reconciliation, and has not dared to confront this negativity. That is why the run-up to Annapolis has been so fraught and unproductive. And that is why the challenge, at Annapolis and beyond, is immense.