President George W. Bush's long-anticipated speech outlining his Administration's policy on Israeli-Palestinian peace negotiations was a breath of fresh air. The speech injected a degree of common sense and realism into U.S. policy that was sorely lacking in the Clinton Administration. Bush set forth a two-state solution for the Israeli-Palestinian conflict: "My vision is two states, living side by side in peace and security". But the President firmly stressed that: "Peace requires a new and different Palestinian leadership, so that a Palestinian state can be born."

This formulation recognizes that the United States cannot jump-start the peace negotiations as long as Yasser Arafat, the principal architect of Palestinian terrorism, continues to dominate Palestinian politics.

By calling on the Palestinian people "to elect new leaders, not compromised by terror," Bush identified the chief obstacle to peace and placed the onus clearly on the Palestinians to take action to halt terrorism. Bush also placed Israel's struggle against Palestinian terrorism in the context of the global war against terrorism. He noted that: "To be counted on the side of peace, nations must act" and he specifically called on all nations to take action against Hamas, Palestine Islamic Jihad, and Hezballah - three terrorist groups who seek to destroy Israel.

Bush also warned Syria that it must "choose the right side in the war on terror by closing terrorist camps and expelling terrorist organizations." This is a well-chosen target for American pressure because Syria is the most important frontline Arab state that still supports terrorism against Israel. An end to Syrian support for Palestinian terrorism would help change the balance of power within the Palestinian camp and make it easier for Palestinian pragmatists to oust radicals still wedded to terrorism as a political strategy.

The President also called on Israel to make some hard sacrifices, notably a return to the military positions that existed before the outbreak of the intifadah in September 2000, an end to new settlement activity in the disputed territories, and ultimately a return to the "land for peace" deal envisioned under U.N. Resolution 242. But significantly, the Israelis won't be asked to surrender further land until the Palestinians have demonstrated that they are capable of delivering peace. This places the immediate burden on the Palestinians to break with Yasser Arafat's failed policies and cooperate in building a genuine peace in order to obtain a state of their own. Such an outcome would be a huge step in the right direction.

James Phillips is a Research Fellow at The Heritage Foundation