For weeks now, America and Israel have talked up the idea that, contrary to all appearances, a peace initiative may be afoot in the Middle East. Last week Condoleezza Rice, the US secretary of state, announced a $63bn package in military aid to the Middle East, aiming to counter Iran's growing influence in the region, but also shoring up Arab support for a peace initiative. Yesterday the Israeli prime minister Ehud Olmert met the Palestinian president Mahmoud Abbas in the West Bank town of Jericho. Mr Olmert said that Israel and the Palestinians would expand negotiations to "formulate a framework" that would allow both sides to move towards establishing a Palestinian state. These meetings lay the groundwork for a regional summit including Saudi Arabia, in Washington in November. Ms Rice has vowed it will be more than a photo-opportunity.

Tackling Iran's nuclear ambitions may be a higher priority in Washington than ending the Israeli occupation of Palestinian territories, but the two are inseparably linked. The support of Saudi Arabia and other Arab states against Iran still requires movement on Palestine. The question is how much and in what direction. On the immediate issues facing the Palestinian Authority - lifting the roadblocks, dismantling settlements, releasing prisoners, restoring tax revenue - there has been little progress in the West Bank, and none at all in Gaza, which is cut off from the outside world. Israel released 255 prisoners last month as well as some of the withheld revenue. But these are small steps, given what remains to be done.

On the distant issues - the so-called final status issues of the future borders of a Palestinian state, the right of return of Palestinian refugees from the 1948 war, and the status of Jerusalem - no progress has been achieved since the last talks ended seven years ago. Mr Olmert refuses to discuss "core issues" on the pretext that failure to reach agreement on them could jeopardise progress on the smaller ones. That leaves talks about an intermediate stage. These would be about a Palestinian state with provisional borders, the stage of negotiation that was originally envisaged in phase two of the road map. By attempting to jump straight to this stage, without first negotiating an end to the occupation, Israel is leading Mr Abbas into dangerous waters.

Without pinning Israel to specifics, a putative state would be a Palestinian nightmare, leaving vital questions unanswered and no timetable for answering them. The Palestinian people have already been split into two, when Hamas took over military control of Gaza. A Palestinian state would be split into many more pieces if it accepted the status of an entity with no borders, no sovereignty and no viable economy. Mr Abbas, a veteran of the Oslo process which created the road map, knows this. But he is attempting to extract tangible benefits with which to shore up his presidency. Yesterday he asked Mr Olmert to release more of the 11,000 Palestinian prisoners Israel still holds. Hamas may have been excluded from the international arena, but it has not disappeared from the local one. Hamas still retains the power to challenge Fatah's rule in the West Bank. The West Bank is not under complete Fatah control and, as the prime minister, Salam Fayad, admitted yesterday, PA security forces are unable to impose law and order, even on their own turf.

Rather than address Hamas as a political fact in Gaza, Israel has chosen to divide and rule, even though it concedes that no settlement can be made with a divided Palestinian people. Israelis often question Palestinians' real acceptance of the state of Israel. But the same question could now be asked of Israel. If a two state solution is anything more than declarative, will it really accept a viable Palestinian state? Now would be a good time for Israel to start showing that it would.