Wheels come off a golden carriage that was always just a pumpkin

So who is surprised? Who on earth - barring CNN and an increasingly desperate President Clinton - really thought they could turn the pumpkin of the Oslo agreement into a golden carriage of peace? What folly prompted Yasser Arafat to accept that agreement seven years ago, a treaty without guarantees, which promised no statehood, no end to Jewish settlements, no return of Palestinian refugees and - most important of all - no capital in Jerusalem? The carriage may have looked good on the White House lawn in 1993, with its "historic" handshake between Messers Arafat and Rabin, and Mr Clinton quoting the Koran. But it had no wheels.

So who is surprised? Who on earth - barring CNN and an increasingly desperate President Clinton - really thought they could turn the pumpkin of the Oslo agreement into a golden carriage of peace? What folly prompted Yasser Arafat to accept that agreement seven years ago, a treaty without guarantees, which promised no statehood, no end to Jewish settlements, no return of Palestinian refugees and - most important of all - no capital in Jerusalem? The carriage may have looked good on the White House lawn in 1993, with its "historic" handshake between Messers Arafat and Rabin, and Mr Clinton quoting the Koran. But it had no wheels.

Seven years ago, it was all about trust - Technicolor trust - the "peace of the brave", the euphoria of two old enemies, the sons of Abraham making friends. But everything they should have been talking about - Jerusalem, settlers, refugees, statehood - was postponed for three years. And such was the nature of this lop-sided, hopelessly unfair agreement, that the deadlines slipped away and only now, after another three years' delay have the antagonists confronted reality: Oslo doesn't work.

Just look at what it originally said. The Oslo Declaration of Principles, Article 1 ("Aim of Negotiations") said specifically that "it is understood that... final status negotiations will lead to the implementation of Security Council Resolutions 242 and 338."

These 1967 and 1973 resolutions called for the withdrawal of Israeli forces from Arab territories seized in the 1967 war and the security of all states (including Israel) in the area. But Oslo allowed the Israelis to renegotiate Resolution 242, to decide which bits of occupied territory it would give back - the garbage tip of Gaza, for example - and which parts it would keep: Jerusalem and most of the settlements.

And by yesterday Mr Clinton, in his statement of defeat, was reduced to changing the very terms of Oslo, announcing only that the negotiations were "based" on 242 and 338 - which was not what Oslo stipulated at all. Mr Arafat must have realised that the end had come when Madeleine Albright made her preposterous offer - immortalised in a report in yesterday's New York Times - of "a sense of sovereignty" over the Muslim religious sites of Jerusalem. So much for statehood. So much for an Israeli withdrawal from occupied East Jerusalem. So much for a halt to settlement building. Even the silly villages which Mr Arafat might have controlled outside his would-be capital would have "virtually [sic] full sovereignty", according to the Americans.

Yitzhak Rabin died for his peace treaty with the Palestinians but Mr Arafat is not the stuff of which martyrs are made. He knows what happened to Michael Collins after another hopelessly one-sided "peace". Yet what can Mr Arafat tell his people now? Seven years ago, I drove the by-pass roads that Israel was building to prevent Palestinians reaching Jerusalem. "Arafat's Road to Ruin" was the headline to my story. Israel's friends exploded in rage. What cynicism. What bias. Did we not realise that Oslo represented the best chance for peace in a hundred years?

Sadly, the story of that winding road was all too accurate. It ran out, yesterday, at Camp David. Ehud Barak wouldn't give up Jerusalem. He wouldn't abandon the settlements. Mr Arafat would not make the "concession" - for which read capitulation - of ceding Israeli control over all of Jerusalem. So the sons of Abraham acknowledged what so many Israelis and Palestinians knew all along: Oslo didn't work. Mr Clinton predictably saw fit to praise the stronger of the two parties - he spoke of Mr Barak's "courage", vision", etc - but merely referred to Mr Arafat's "commitment". So much for America's role as the "honest broker" of the Middle East peace.

Offered virtual sovereignty to secure virtual peace, the Palestinian leadership - corrupt and effete and undemocratic - preferred failure to humiliation. Now they are supposed to talk it all through again by mid-September. And Mr Clinton says they must avoid "unilateral action" - he meant a declaration of statehood by Mr Arafat, something the Israelis have threatened to oppose with annexation. Have no doubt, it may be all Mr Arafat has left to offer Palestinians. Virtual statehood, that is.