Where would the Middle East be without another war?

No one knows, because every passing year seems to bring with it a new armed conflict, and 2007 was no exception, producing a brief but bloody outbreak of fraternal killing that has sharply divided some 3 million Palestinian people, while plunging the inhabitants of the Gaza Strip into even greater depths of misery.

Paradoxically, however, the five-day shootout that splintered Palestinians this past June also ignited the first glimmers of peace this region has known in seven years.

The fracture in Gaza was by no means the only outbreak of fighting and death in the Middle East this year – the Iraq war grinds on, as do seemingly perpetual hostilities between Israelis and Palestinians, even as they talk of peace.

And there have been other sources of alarm, including a perilous political standoff in Lebanon that has all but stymied government operations there, not to mention a mysterious Israeli bombing raid over Syria in September that has so far sparked more questions than answers.

As the year drew to a close, Israel also suffered an unpleasant foreign-policy surprise with the release of a U.S. government intelligence report that contradicted the conviction still prevalent here that Iran is developing nuclear arms.

Instead, said the report, Tehran abandoned those efforts in 2003, although it continues to pursue the ability to enrich its own supply of uranium, a crucial element in any nuclear weaponry program.

And so almost every politician, pollster and pundit in Israel remains as certain as ever that Iran poses this country's greatest external threat.

Still, the summertime split between Hamas and Fatah in the Palestinian territories was likely the key event in the region during the year, altering the political terrain of the Holy Land in ways that have engendered new trouble, greater suffering and, just possibly, hope.

"This is an historical opportunity for all parties," said Yasser Abed Rabbo, a top negotiator for Fatah, the more moderate of the two main Palestinian political factions and the only one now actively seeking peace. "We don't have any other option, and the Israelis have no other option, except to take this challenge."

Rabbo was speaking in advance of a one-day conference in Annapolis, Md., in November that marked the formal launching of yet another international quest for concord in a fractious region where people have been at each other's throats for six decades.

With U.S. backing, the leaders of Israel and Fatah are at least talking to each other, something they had ceased to do following Palestinian elections early in 2006 that propelled the radical Islamists of Hamas to power in both Gaza and the West Bank.

Committed to armed struggle and unwilling to acknowledge Israel's right to exist, Hamas was immediately shunned by the Jewish state, a policy that did not soften even with the formation of a short-lived Palestinian unity government.

That wobbly coalition soon collapsed, when long-festering tensions between the two Palestinian factions exploded into open warfare in June.

The fighting left Hamas in charge of Gaza, while Fatah withdrew to the West Bank.

Although catastrophic for the people of Gaza – who now dwell in a virtual prison, deprived of most imports and exports, their borders with Israel largely sealed – the split in Palestinian ranks provided an opportunity for Israel to deal with Fatah alone.

Initially, there was considerable optimism on both sides that the resulting talks might actually go somewhere, but those hopes have been dwindling for some weeks.

"Not many things that are positive are coming out of Annapolis," said a senior Israeli official during a recent briefing for foreign press.

Part of the impetus behind the Annapolis summit was the desire by both Washington and Israel to forge a common front between the Jewish state and moderate Arab governments in the face of Iran's emerging regional might and its backing for radical Islamist groups.

On that score, Annapolis was something of a success, if only because most Arab countries agreed to send senior officials to the meeting.

Even Syria dispatched its deputy foreign minister.

As for peace between Israelis and Palestinians, however, it is increasingly difficult to find an encouraging voice, never mind the optimism that surrounded a series of informal meetings in the fall between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas, who seemed to find many areas of agreement.

Unfortunately, much of that common ground had eroded by the time of the Annapolis conference.

"This is where we are," said the senior Israeli official. "We are starting discussions from scratch."

But this is the Middle East, after all, where one step forward is almost always accompanied by two steps back.

Consider Gaza, where the political outlook seems fraught with undiluted war, rather than the faintest prospect of peace.

Almost daily, militant groups such as Islamic Jihad fire homemade rockets out of the territory, directed at populated areas of Israel, mainly the nearby town of Sderot – a practice condoned by Hamas.

Up to the end of November, 836 such missiles had soared out of Gaza during the course of 2007 and there has been no let-up since. Two Israelis have been killed in the attacks so far this year. At least 122 have been injured.

After almost every salvo, the Israeli military unleashes an aerial or ground assault – usually lethal – but there is an enormous gap in perception between the two sides about what is really going on.

In what sometimes resembles a deadly adult version of the childhood pastime familiar to parents of scuffling siblings everywhere ("But he hit me first!"), both the Israelis and the Palestinians see the other as the aggressor and regard themselves as the virtuous defender of their legitimate rights.

Unlike Gaza, from which Israeli forces withdrew in 2005, the threat of terrorist attacks from the West Bank has largely been contained.

The reason the threat is contained, the Israelis say, is the continued presence of their forces in that territory.

Hard-liners in the Israeli security establishment are now pressing for a major incursion into Gaza, aimed at stemming the suspected smuggling of weaponry into the territory from neighbouring Egypt and at crippling Hamas's military infrastructure.

So far, the politicians are mostly against it, but this could change quickly should a rocket from Gaza suddenly plow into an Israeli school, for example, crushing young lives and rendering war all but irresistible. "It is the main fear," said the Israeli official.

U.S. President George W. Bush is scheduled to visit Israel and the Palestinian territories early next month, to add additional political muscle to the fledgling peace process, but it may not be enough.

"I daily pray for peace," said Sami Qumsieh, general manager of a Christian television station in the West Bank city of Bethlehem. "But I don't think it will come."