Israeli and Palestinian negotiators headed off to Washington last night for talks that Israeli officials said could lead to a new peace deal. Palestinian officials played down the prospects for a settlement.
As shooting continued back home, at least four Palestinians were killed and one Israeli was badly hurt. And Mr Benjamin Netanyahu, the hardline former prime minister who wants a second chance at the job, took another step towards winning it.
The new diplomatic initiative - perhaps the Clinton administration's last chance at peacemaking - is not, at first, expected to yield so much as a face-to-face Israeli-Palestinian meeting. Instead, US officials are to hold separate consultations with the negotiating teams. But if the initial contacts are productive, three-way talks will be held.
Neither the Palestinian Authority President, Mr Yasser Arafat, nor the Israeli Prime Minister, Mr Ehud Barak, is scheduled to fly to Washington, but neither man is ruling out a trip. Asked whether he was prepared to meet Mr Barak, Mr Arafat said yesterday: "If it is needed, why not?"
The Israeli Justice Minister, Mr Yossi Beilin, insisted there was no reason why the two sides could not achieve the seemingly impossible, and snatch a permanent Israeli-Palestinian peace treaty from the jaws of diplomatic defeat.
Mr Beilin acknowledged that the only change since failing to reach such a deal at the Camp David summit last summer was for the worse, with the descent into violence that has seen 325 people - the overwhelming majority of them Palestinian - killed in 11 weeks of fighting. He dismissed reports that Israel was now ready to grant the Palestinians control of the disputed Temple Mount, the issue over which the Camp David talks stalled.
Nonetheless, Mr Beilin suggested, perhaps the mere "passage of time" since Camp David, combined with the awareness that the incoming Bush administration sees Middle East peacemaking as less of a priority, might be enough to prompt some progress.
Such optimism was hardly reciprocated on the Palestinian side, however, with senior negotiator Mr Saeb Erekat insisting there could no accord without a "complete Israeli withdrawal" from all land in Jerusalem, the West Bank and Gaza captured by Israel in the 1967 war - a formulation that Mr Barak might accept as a starting point for negotiation, but not as solution.
Privately, Palestinian officials have said they are coming under pressure not to return to the negotiating table at all. Mr Marwan Barghouti, leader of the Tanzim militias in the West Bank, whose ostensible loyalty to Mr Arafat is coming increasingly into question, has opposed the new diplomatic initiative and vowed to continue the intifada. And the militant Islamic Jihad organisation has taken to making dark threats against Mr Arafat should he negotiate a deal.
"The intifada toppled Ehud Barak," it declared in a recent statement, referring to the collapse of the current Israeli government. "Will it also topple others?"
The Palestinian anger is fuelled daily with the rising death toll. Two Palestinians were killed yesterday at the southern tip of the Gaza Strip, and a third was killed at the Kalandiya refugee camp north of Jerusalem, in what the Palestinians claimed was the latest in a series of Israeli "hits" on alleged leaders of the new intifada. The fourth Palestinian killed was apparently shot as a collaborator with Israel.
An Israeli man was seriously injured in the West Bank, while armed Palestinians fired shots at two buses carrying Israeli children.
Mr Netanyahu has formally submitted his candidacy for the leadership of the Likud party, where his main opponent is the current leader, Gen Ariel Sharon. The Knesset will today decide whether to pass the so-alled "Netanyahu law", which would enable him, even though he is not a member of parliament, to challenge Mr Barak's re-election attempt on February 6th. Alternatively, the Knesset may vote to dissolve the house and have full general elections.
Reuters adds: Israeli warplanes flew at low altitudes over Lebanon yesterday, breaking the sound barrier and violating the country's airspace for the second day running.
The planes staged several mock raids over the whole country, flying at supersonic speed and causing loud booms to rattle windows from the capital Beirut to Lebanon's south.
Israeli jets had performed similar menacing flights on Saturday. There have been no reports of anti-Israeli guerrilla activity in Lebanon over the past two days.