The Israelis: Two battles rage. One in the open, the other hidden

The Israeli-Palestinian conflict, which climbed several notches in the scale of barbarity last week with the wave of suicide bombings and counter-attacks, is also a war for the succession within Israel and Palestine. Both the Israeli Prime Minister and the Chairman of the Palestinian Authority face powerful internal opposition. Ariel Sharon, 73, and Yasser Arafat, 72, are both approaching their political sunsets. Arafat suffers from Parkinson's disease, is visibly ailing and confronts a surge of support for the Islamic extremists of Hamas and Islamic Jihad. Sharon is obese and shows his age in his lumbering gait and slow mental responses. He is harried by his younger, more energetic rival, the former Prime Minister Binyamin Netanyahu.

Internal politics have driven most of Sharon's decisions since he took office in February. He needs to keep the Labour Party in his coalition to maintain a workable parliamentary majority. But he remains aware of the danger on his right flank from the settler movement and their champions, including Netanyahu.

Arafat, too, has been guided primarily by internal political considerations at key moments in recent years, including his fateful rejection of the US-Israeli proposals at Camp David last year and his refusal to offer any serious alternatives. Like Sharon, he is an autocrat. Yet Arafat's leadership style has often been consensual rather than confrontational – probably more out of necessity than conviction. No doubt recognising the danger of descent into an internecine bloodbath, he has tried to co-opt rather than eliminate rivals.

While Arafat's tendency is to procrastinate, Sharon's natural inclination is towards impulsive military action. At the time of the Lebanon war in 1982, the fiasco of which he was the chief architect, he was said to favour clearing all the Palestinians out of the West Bank and driving them into Jordan. He no longer utters such thoughts but since his friend and cabinet colleague, Rehavam Ze'evi, was assassinated a few weeks ago, other proponents are advocating them. Senior ministers call openly for the destruction of the Palestinian Authority and the elimination of Arafat. These views were echoed last week by Moshe Katzav, Israel's non-executive president.

When Sharon came to power he told the Israeli people he had a "plan", which was never revealed aside from the claim that he had a military strategy for dealing with terrorism. There was little else but vague talk of interim accords and a re- affirmation of readiness to accept the creation of a Palestinian state – but not yet. Sharon realises he cannot eliminate Palestinian terrorism by military hammer blows; yet these are essential to protect his right flank. At the same time, he dare not destroy the Palestinian Authority as this would lead to a Labour walkout from his shaky government.

Arafat, under orders from Sharon and the US to take action against Hamas and Islamic Jihad, cannot quite bring himself to initiate a Palestinian civil war. He would run the risk of an explosion of popular wrath, particularly in Gaza and possibly in the northern West Bank city of Nablus. That could shatter what little remains of the tattered legitimacy of his regime.

Sharon and Arafat have been adversaries for two decades. In 1990 Sharon spoke of sending a hit team to assassinate Arafat: "There are certain people whose activities cannot be tolerated by a free, democratic society," he said. "They should be removed." Yet, paradoxically, the Israeli and Palestinian leaders need each other as scapegoats for their own failures.

Most Palestinians have written off Sharon as a warmonger with whom peace is impossible. Similarly, most Israelis have written off Arafat as a recidivist terrorist with whom no deal is feasible. The exasperated US administration privately endorses both evaluations, but countenances Sharon for the time being. The Palestinian suicide bombers cannot succeed in their aim of destroying Israel; nor can the Tanzim militias of Arafat's Fatah movement have any hope of driving Israel out of the occupied territories.

The Israelis, too, face an impasse. They cannot eliminate terrorism using ever-escalating force; nor have they found a way of subduing the seething resentment of the Palestinians in Gaza and the West Bank.

Sooner or later, there must be a return to the negotiating table. There is a blueprint for peace – the draft plan that came close to securing agreement in the last Israeli-Palestinian negotiations in Egypt in January. This calls for an Israeli withdrawal from most of the West Bank and the establishment of a Palestinian state. Neither the US nor the EU has the stomach to impose it. But they are trying to nudge the parties towards this solution.

Yet little diplomatic movement seems possible until Sharon and Arafat are replaced. Each will probably give way to a leader from a new generation. The most likely successor to Sharon is Netanyahu, who has made a comeback since his electoral defeat in 1999. The Israeli Labour Party is mired in internal conflict and seems incapable of producing any alternative candidate for leadership. The former foreign minister, Shlomo Ben-Ami, enjoys the advantages of Moroccan birth and an Oxford education. But he has been weakened by an ongoing inquiry into his ministerial responsibility for the shooting by Israeli police in October 2000 of 13 Israeli Arab demonstrators. He lacks support, but has ideas.

Arafat has no obvious successor. Politicians such as Abu Mazen (Mahmoud Abbas), chief negotiator of the Oslo Agreement, have only a limited following. Marwan Barghouti, head of the Tanzim militia, has emerged as a popular figure: but he now fears that he is on the Israeli "targeted shooting" list for assassination. The most probable replacement may be drawn from Arafat's security chieftains. The two most prominent are the chief of preventive security in the West Bank, Jibril Rajoub, and the chief of Gaza preventative security and chief of the Palestinian intelligence service in the West Bank, Mohammed Dahlan.

Rajoub is a loudmouth under whose authority torture of political detainees has become routine. Dahlan is a sure-footed operator who could become a formidable leader. For the Western powers the most attractive candidate would be someone such as Sari Nusseibeh, president of al-Quds University, who was nominated by Arafat to take charge of Jerusalem affairs in succession to the late Faisal Husseini. Nusseibeh has made statements urging an end to what he sees as futile violence and in favour of a settlement. He has no broad political base. But like his fellow-Oxonian Ben-Ami, he has ideas of his own.

How long will it be before this younger, more sophisticated political generation can seize the reins? It is impossible to say. One thing is certain: nobody can impose new leaders on the Israelis or Palestinians. They must make these choices themselves. Until they do so, there can be little prospect of an end to the agony of these two peoples.

Bernard Wasserstein is the author of 'Divided Jerusalem: the Struggle for the Holy City', published by Profile Books