Last Tuesday was one of the most emotional days in Israel’s modern history. Virtually the entire nation was moved to its core at the sight of the young, frail Gilad Schalit making his way to freedom after almost five-and-a-half years in Hamas captivity.

It touched on the nation’s fundamental values of the sanctity of life, especially in this case of a young soldier, sent by his government and cared for by his family who struggled with tremendous dignity to rescue their son and found a place in almost every Israeli heart.

In Gaza as well, there was jubilation by large crowds after the release of over 400 Palestinian terrorists. We may not like these scenes, but it is important to understand that both sides feel victorious and joyous. Alongside these outbursts of emotion, the deal was a victory for pragmatism.

Prime Minister Binyamin Netanyahu, who for his whole life refused negotiations with terror organizations, not to mention compromising with them, did exactly that.

In this, he demonstrated pragmatism and leadership for which he deserves to be commended.

Khaled Mashaal, Ismail Haniyeh and company are fundamentalists and ideologues of conflict by nature. Yet they too preferred a pragmatic compromise for which they were internally criticized.

The main reason the prisoner swap took place now is related to the shifting sands in the Middle East – specifically the weakening of Hamas’s main base and ally, Syria, which is in complete inner turmoil. This led Hamas to see in Egypt a possible substitute.

Egypt itself has a strong interest in proving that even after Mubarak it can play a mediating role in Palestinian-Israeli negotiation.

There is another symptom of the Arab Spring that affected the Palestinians – the growing power of the people as witnessed in Tunisia, Egypt, Yemen, Libya and Syria. Even Hamas has to listen to its constituency.

The same can be said for Israel – Schalit’s release was a prominent theme in this summer’s protest movement, and that is one language Netanyahu understands – public opinion.

In both nations, the deal was built around a national consensus, with all important political factions expressing support in principle, including Palestinian Authority President Mahmoud Abbas and Fatah in the Palestinian territories and the opposition in Israel. Public opinion in both nations similarly showed a wide consensus.

Much discussed in Israel now is how to avoid another unbalanced prisoner swap in the future, through legislation or by instituting the death penalty for terrorists.

All this debating will become irrelevant if we are faced again with a similar human predicament in the future.

There is only one way to prevent the cycle of terrorism, terrorists in prison, kidnapping of Israeli soldiers and then unbalanced prisoner swaps. All of these are a function of a bitter conflict and only a viable peace process between Israel and the PA can break the cycle. All other “solutions” operate within a status quo which needs to be altered.

For this to happen we must understand the elements that made the deal happen – political pragmatism, basic internal consensus, leadership, changing power structures in the region and the growing importance of public opinion. Indeed, in the aftermath of the prisoner deal, we may be facing a new opportunity to tackle the peace process in a different manner than before; the fact that both sides feel essentially victorious is a good psychological basis.

Initially, each side needs to work internally to strengthen the new consensus.

In Israel, Netanyahu should understand now that when it comes to negotiations with the Palestinians, there are no shortcuts, and that difficult leadership decisions are needed to achieve pragmatic compromise.

Furthermore, Netanyahu must understand that in peace, as in prisoner swaps, public opinion will support a courageous leader doing the right thing.

Israel needs to understand that today there is a different Middle East – a region where people matter, and dictatorships do not survive.

Peace will have to be made with the Arab peoples, specifically the young, who want to see their Palestinian brethren free from occupation in a two-state solution. The alternative is another cycle of violence. In a peace process we can work alongside Egypt – in violent conflict, the new Egypt will be against us.

Most important, the prime minister needs to build on the current political consensus and offer Kadima and Labor a national unity government with realistic guidelines for a peace process along the lines of the Obama vision, and for socioeconomic reform.

On the Palestinian side, Abbas definitely comprehends that Hamas has been strengthened by the deal, despite his own newly gained popularity after the move at the United Nations. He, like Netanyahu, must understand that unilateral shortcuts are futile and that only direct negotiations can lead to the creation of an independent state.

This is even more the case in today’s region, where most states are preoccupied with internal matters and the Palestinians are left by and large to their own devices.

Abbas should also build on the new atmosphere in Palestinian society and reach a pragmatic and tenable reconciliation deal with Hamas that includes the Quartet conditions – recognition of Israel, an end to terror and direct negotiations, possibly through Egyptian mediation.

Based on such political consensus-building, the two sides should then engage in direct negotiations. Initially on day-to-day issues such as cease-fire, an end to terror, the termination of the Gaza blockade, a settlement freeze, economic relations, etc.

In the second stage, with the facilitation of President Barack Obama and the Quartet, both sides need to engage in permanent- status negotiations, staring with borders (based on the 1967 lines with mutually agreed land swaps) and stringent security measures to prevent terror and violence; and then proceeding to all other permanent- status issues.

If the prisoner deal has taught us one thing, it is that we have to stop being the commentator of the region and the abstract planners of unrealistic policies. We must act with courage and realism in order to affect change in a different Middle East, in our and its interest.

Upon his release, Gilad Schalit was asked about his wish for the future. He said: Peace between Israel and the Palestinians, and that the Palestinians should cease attacking Israel.

We can and we must, grant him this wish. There is another way. Actually, it is the only way to a better future.