The Palestinians and Israel face an Israeli prime minister, Ariel Sharon, who has been grimly successful in his brutal policy over the last year.
The Palestinians have been forced back onto a prisoners' hunger strike, with its demands limited to better prison conditions. The Israeli left is on the defensive. The left internationally must break with futile revenge fantasies about sweeping away Israeli power "from the river to the sea", and re-focus on the only way forward that can allow for working-class unity across the divides: Israeli withdrawal from the Occupied Territories, and the right of the Palestinians to an independent state of their own alongside Israel.
Until the Beersheba bombing of 31 August, Palestinian suicide-bombing attacks inside Israel had ceased for months. There had not been one since 14 March.
That is good. But Sharon acheived it through sheer military attrition, part of a policy which can only double and treble the oppression and embitterment at the root of the violence - which may now escalate again, with renewed Israeli army attacks on the Palrestinians, and renewed bombings.
The "roadmap" for a diplomatic settlement announced last May by the UN, Russia, the EU, and the USA has been sunk.
In August the Israeli government announced tenders for another 1800 houses in West Bank settlements - including ones deep inside Palestinian populations. According to the Associated Press: "US officials remained silent - unlike in the past when such Israeli moves were criticised as 'obstacles to peace'...
"A US official told the Associated Press that, although there has been no formal decision, the American government does not object to construction inside existing settlements...
"It's a break from decades-old US Mideast policy".
The "roadmap" suggested, on paper anyway, a two-states settlement, with an independent Palestinian state alongside Israel and roughly the 1967 border. It explicitly referred to a freeze on settlements. Continued expansion of Israeli settlements deep inside the West Bank will make any viable independent Palestinian state impossible. The West Bank settlements already hold 250,000 Jewish settlers, far more than the 8000 in the Gaza strip.
Sharon's plan, announced in December 2003, is to withdraw from the Gaza strip alone while expanding settlements in the West Bank.
Sharon has managed to tilt the terms so that, diplomatically and in mainstream Israeli politics, debate is between that Gaza plan and no Israeli concessions at all, with any genuine two-states settlement off the radar.
He has also successfully damaged the Palestinian Authority, diplomatically and politically.
The Gaza plan is unilateral, and faces the Palestinian Authority with the danger that, if Israel withdraws, Gaza will then be ruled by Hamas.
All this success for Sharon, in his own terms, explains why he is determined to press ahead with his Gaza plan even though his party, Likud, has voted it down.
According to his latest timetable, Sharon wants to get a detailed plan finalised by 24 October, and then remove all 21 Jewish settlements in Gaza in one operation early in 2005.
To do this, he says he is willing to form a coalition government with the Israeli Labour Party's Shimon Peres, even though a Likud convention on 18 August voted that down, too.
Many Labour Party leaders are unhappy about a coalition, and officially Labour is calling for new elections.
Sharon has successfully pushed through attacks on Israeli workers, too, cutting social budgets. But Israeli local authority workers will strike on 1 September over the cuts.
So Sharon's coalition/ Gaza plan may fail. More important, it is a plan which, if successful, means an indefinite future of oppression, suffering, and rancid conflict.
An "independent" Gaza will be a pauperised hell-hole. The West Bank Palestinians will continue to live, also pauperised, under Israeli military control or at best in hemmed-in, fake-independent Bantustans, surrounded by concrete walls, barbed wire, and Israeli troops.
The construction of Sharon's Separation Wall - which winds deep into the West Bank - has been slowed down since the International Court of Justice ruling on 11 July against the Wall, and the Israeli government promises to modify the route: but it has not been abandoned.
Sharon's chauvinism is also poisoning Israeli society. One index is the lack of reaction, other than from a courageous few on the left, to the Israeli government's brutal response to the Palestinian prisoners' hunger strike which started on 15 August. "Let them starve to death", the government said.
The hunger-strikers are a large proportion, and by some accounts the majority, of the 7600 Palestinian prisoners in Israeli jails (who include over 1000 on "preventive detention orders", held without charge or trial).
The main organisers of the hunger strike are the Islamic-fundamentalist Hamas - they have forced the Palestinian Authority to tag along in support - but they have raised no explicit political demands. Instead, in an attempt to find some point of leverage in a desperate situation, they are demanding alleviation of prison conditions - an end to strip searches, more frequent family visits, better medical treatment, an end to solitary confinement, restoration of study facilities, etc.
Our support for the hunger strikers must go together with a concerted effort to put back on the agenda the only democratic way out: Two nations, two states!