Tomorrow marks the 40th anniversary of the 1972 Munich massacre in which Palestinian militants killed 11 members of the Israeli Olympic team. For many Westerners, the incident was the most chilling example of international terrorism before 9/11.

Munich — and the lessons learned from it — played a pivotal role in shaping American views on terrorism: Terrorists were bloodthirsty fanatics bent on spreading destruction and anarchy. Negotiation with such extremists was futile and immoral. The only acceptable response was to crush them.

This was essentially America’s response to terrorism for the next four decades as the frequency and ferocity of attacks rose. As terrible as Munich was, the response from President Richard M. Nixon did nothing to help the situation; rather it played into the hands of the most militant Palestinian factions, ensuring that the violence would continue.

Most scholars of the Palestine Liberation Organization now agree that attacks like the one in Munich were designed by Yasir Arafat’s rivals to shift power away from moderates and into the hands of more radical factions. The string of attacks attributed to the Palestinian Black September Organization between November 1971 and March 1973, of which Munich was the most dramatic, were actually an indication of the rifts within the P.L.O. While events like Munich seized headlines, a growing number of moderates within the P.L.O. — most notably Arafat — were putting out feelers about the prospect of a two-state solution in the Israeli-Palestinian dispute.

Although their rhetoric continued to call for Israel’s destruction, moderate leaders sent private signals indicating a willingness to compromise. “We need a change of tactics,” Arafat told Soviet officials in 1971. “We cannot affect the outcome of the political settlement unless we participate in it.” He then drew a map outlining a two-state solution for Israel and Palestine.

As State Department officials recognized in June 1972, the “young wolves” in the movement had forced Arafat to “back off” from serious peace overtures in order to remain in power.

Munich was also engineered to elicit violent reprisals from the Israeli government — which it did in the form of airstrikes against Palestinian refugee camps in Lebanon and Syria that killed hundreds, mostly civilians. Persuaded of the fundamental evil that Palestinian militants represented, American leaders remained steadfast in their refusal to condemn Israel for its attacks on Syria and Lebanon, choosing instead to cast America’s first lone veto of a Security Council Resolution on Sept. 10, 1972. The veto affirmed Washington’s position on the P.L.O.: no recognition, no negotiation and no legitimacy for terrorists.

In retrospect, it is hard to imagine how the Nixon administration could have reacted differently to the shock of the Munich murders. The spectacle of Jewish athletes being slaughtered in Munich, once the seat of Hitler’s ambitions, was perhaps too ghastly to allow for any alternative approaches.

It cannot be argued, however, that American leaders were unaware of the growing pragmatism within the P.L.O. Declassified White House papers show that, as early as 1970, State Department officials told Nixon that the Palestinians “cannot be ignored” and argued that they could become “constructive partners in a peace settlement.” American officials at the United Nations stressed that the Palestinians were “an essential element” and urged Washington to bring them into the peace process quickly.

Ultimately, the political need to stand up to “terrorism” made a more nuanced approach to Palestinian nationalism difficult. While Nixon might have negotiated with guerrillas — as he was in the process of doing with the National Liberation Front in South Vietnam in 1972 — to do so with “terrorists” seemed another matter altogether.

By failing to strengthen moderates within the P.L.O. and effectively locking the Palestinians out of the Arab-Israeli peace process, American officials sidelined potential peacemakers and pushed Palestinian national ambitions to the back burner. The decision to label all armed Palestinian groups “terrorists” postponed negotiations with the P.L.O. by 15 critical years, during which time the Lebanese civil war and the intifada helped spawn more militant groups like Hezbollah and Hamas. By the time relations were finally established in the late 1980s, Hamas’s star was already rising.

The lesson of America’s reaction to Munich is that the blanket charge of terrorism, coupled with absolute nonrecognition, is too unwieldy a tool for dealing with multiple complex political organizations. For violent groups like Al Qaeda and Islamic Jihad, which have unshakable commitments to destroying Israel or re-establishing the Islamic Caliphate, a forceful approach may be appropriate. But Washington shouldn’t rule out alternatives when dealing with groups that may have more limited long-term goals, like Hezbollah and Hamas.

As Nelson Mandela, Gerry Adams and Menachem Begin have shown, yesterday’s “terrorists” have a tendency to turn into tomorrow’s peacemakers. We should be careful not to let our fears of terrorists continue to blind us to opportunities when diplomatic openings present themselves. Ignoring chances for peace does nothing to honor the memories of those who died in September 1972.