President George W. Bush arrives in the region this week in an attempt to revive the peace process, as Israelis and Palestinians have failed to make significant headway since the Middle East summit in Annapolis, Maryland. Many believe that this lack of progress is due to Israel's opaque settlement policy, the violence in Gaza, and the fact that the gaps and the mistrust between the parties are essentially too great. The Bush administration itself appears hesitant to exert the necessary pressure for an agreement, perhaps because past agreements were violated anyway by one or both parties (notably the Oslo Accords, the Wye Agreement and the road map). But something deeper, it seems, clouds the air and prevents genuine progress: a lack of a new political imagination.

The idea of the nation-state was the foundation of the UN General Assembly's decision in 1947 to divide the country between Palestinians (Arabs) and Jews. The establishment of two such distinct states was considered a fair and workable solution. Six wars later, with a vast refugee problem, two intifadas, dramatic changes in territory and ongoing conflict, the political imagination behind the current peace talks is surprisingly still the same. President Bush envisions "two states, living side by side, in peace and security"; Israelis demand that Palestinians recognize Israel as a Jewish state.

Yet the two main lessons of the conflict's history are perhaps these: Both Palestinians and Jews undeniably think in national terms, do not see their collective units as artificial concoctions and wish to express these identities politically through states of their own; yet left to its own devices, the nationalism of both peoples has proven dangerous and tragic. The rationale behind the nation-state often propelled both peoples to think of their conflict as a harsh zero-sum game over scarce resources, to espouse exclusionary and chauvinistic policies, to ignore the other side and dehumanize it, and to slide into violence with ease. (Leading intellectuals such as Hannah Arendt, Gershom Scholem and Martin Buber predicted these phenomena well before 1947.) While the two nation-states are apparently inevitable, they should be neither the sole political framework nor the unadulterated source of identity.

If the fragility of nation-state politics is to be overcome - and if Hamas and its fundamentalist supporters (Iran and Hezbollah) are to be prevented from benefiting from this fragility - the alternative must be both inspiring and realistic. More wide-ranging political and civic relationships could evolve if the nation-state were to relax its grip. The two independent states could begin by establishing a shared body of representatives, to be elected by districts comprising citizens of both states. These delegates would have to take into consideration interests and concerns (such as environmental policy, regional economic development and labor conditions) that are not purely national. The authority and powers of such a deliberative (and possibly legislative) body would be limited to those delegated by the two states, but even this type of "weak confederacy" would allow a less nationally dominated politics and language to emerge.

But perhaps the key to transforming the prevalent political imagination is Jerusalem (especially the Old City). No other place fosters such trenchant national identities, and no other place offers such potential for transcending them. A division of the city and the holy places between two sovereign states would perhaps allow clarity and effective governance, but would also vanquish the only space where Israelis and Palestinians can meet each other free of the weight of their national personas. The UN resolution of 1947 in fact designated Jerusalem as an international city, and its citizens as a distinct category - both local and cosmopolitan citizens, if you like.

Would Jerusalemites ultimately be able to practice such citizenship? Ask the children, most of whom live below the poverty line (56.6 percent as of 2005). They have already paid dearly for mirroring the national conflict in their midst, and may be willing to try something new.

Jewish and Palestinian nationalism have both proven to be virulent and overbearing. Any agreement that does not aim to reduce this nationalism - and does not create the dams and levees necessary to halt its gushing flow - might be nothing more than a very temporary modus vivendi. This is a time for creative complexity. A stable and enduring peace will emerge only with the crafting of new, shared political spaces where modest forms of a-national identities could evolve.