The failure of the Camp David peace summit appears to have placed Israel and the Palestinians dangerously close to a new round of conflict.
At a press conference before he returned to Israel last night, the Israeli Prime Minister, Mr Ehud Barak, appeared to be warning his people that an upsurge in violence might now be imminent, telling them that he had been prepared to make far-reaching compromises in the talks, but that this had not proved sufficient to appease what he called Palestinian "stubbornness".
His only comfort from the failure of the summit, he said, was that he knew he had done all he could, and that "if we have to go into conflict", he would be able to look "straight into the eyes of our children" aware that he had done everything to try to prevent it.
Palestinian officials, by contrast, blamed Mr Barak for the collapse of the talks, because he had been unwilling to grant them the sovereign rights they sought in Jerusalem.
A Palestinian official in Jerusalem said the President of the Palestinian Authority, Mr Yasser Arafat, would now go ahead, as he had promised before the summit, and unilaterally declare the establishment of an independent Palestine on September 13th, and that the territory claimed by this new state would include East Jerusalem.
Other Palestinian sources, however, said they were not certain how Mr Arafat might proceed, and insisted that the Palestinians had no desire to enter a new round of violence.
In Gaza last night, hundreds of Palestinians were reported to be demonstrating in protest at the failure of the summit - and specifically Israel's refusal to meet Palestinian demands on refugee rights of return and sovereign rights in Jerusalem - and calling for a resumption of the Intifada, the six-year uprising against Israeli occupation in the West Bank and Gaza Strip between 1987 and 1993.
This call was immediately endorsed by Sheikh Ahmed Yassin, the leader of the Islamic extremist Hamas movement, which has always opposed reconciliation with Israel. The failure of the summit, he said, was proof "that the only choice we have is resistance . . . Only by force are we able to retain our rights . . . We are ready to become martyrs."
The concern in Israel is that, in contrast to the Intifada period, the Palestinians now have an armed police force several tens of thousands strong, and confrontation would now be far more bloody.
The Israeli army's chief of staff, Gen Shaul Mofaz, while declaring earlier yesterday that his forces were "ready for any eventuality", said he hoped that the summit, even if no full deal was reached, would at least end in an atmosphere that would ensure further dialogue. But even that faint hope was dashed by the sudden and bitter collapse of the talks.
Mr Barak now flies home to try to rebuild a new governing coalition - his colleagues are already talking about a "unity government" with the opposition Likud. He said yesterday he hoped that violence could be avoided, but that it was "hard to assess" how matters would develop. Ominously, he warned, "the price of not solving (the dispute with the Palestinians) could reach every house in Israel." Pressed further, the Prime Minister said he hoped that the summit's failure marked "the end of a chapter" rather than "the end of the process".
But he could offer no guarantee that dialogue would be maintained, beyond referring to President Clinton's promise to dispatch a senior envoy to the region in the next few weeks.
Early indications are that the talks ultimately broke down over the question of who would hold sovereignty in which parts of the walled Old City of Jerusalem. Palestinian sources said Mr Barak had been "unacceptably" rigid, and had offered the Palestinians sovereignty only at the al-Aqsa mosque on the Temple Mount. Israeli opposition politicians, however, assailed the Prime Minister for having been too generous.