President Bush made two historic breakthroughs in US Mid East policy in June of 2002: first, he was the first president to call for the establishment of a Palestinian state - he predicated that on Palestinian transparnecy and democracy; second, Bush was the first president to declare that Israel had the right to exist as a Jewish state.
The death of Arafat has given many people new hope that the predicates for Palestinian statehood might now finally be met: transparnecy and democracy.
I have had my doubts; I believe that Arafat's death gives the Jihadoterrorists no incentive for suddenly becoming "two-staters." They want to destroy Israel and replace it with a Muslim state.
Now there is another reason for grave doubt that peace and a two-state solution are any nearer now that Arafat is dead: the interim leader and leading candidate to replace Arafat, Abbas (who portrays himself as a two-stater, and was very involved in Oslo negotiations) declared before the Palestinian Parliament (so-called) that Israel MUST accept the "right of return."
"Right of return" is a deal-breaker - because "right of return" would mean that Israel would not remain a Jewish state. This goes against Bush's declaration in June 2002, and it is simply not acceptable to Israel. For Israel a "right of return" is a death sentence - and the palestinians know this; (it's why some Palestinians have publically given up on any two-state solution, and are now instead calling for one Israel - with citizenship for all "Arab Palestinians" in the occupied territories. The Arabs would soon outnumber the Jews and they would be able to use the democratic levers of state to destroy Israel from within. This is also why Sharon had udertake unilateral separation from Gaza - and will do the same in the West Bank - when the time is right -- a move supported by 60% of Israelis).
If Abbas is just posturing - to appear like a "hard-liner" to Jihadoterrorists before the upcoming election - it means he is essentially an appeaser, and that bodes poorly for the peace process on another front - because the single most important job that a Palestinian Authority has is to stop Jihadoterror against Israelis. If Abbas is already appeasing the Jihadoterrorists, then it probably means he will appease them after winning the election. Appeasing terrorists never stops terrorism; it only encourages them.
It will soon be time to accept the fact that short of destroying ALL the Jihadoterrorists in Gaza and the West Bank - (as we are finally doing in Iraq) - there can be no peace, nor self-rule for Palestinians. If the Palestinians will not destroy the Jihadoterrorists, then someone else will have to.