JERUSALEM —  Seven years of violence have bludgeoned expectations for Mideast peacemaking, and Israelis and Palestinians are greeting President Bush's belated drive to solve their decades-old conflict with deep skepticism.

The major concession required to make it happen _ an Israeli withdrawal from the West Bank _ looks increasingly unlikely because of the rise of Islamic militants in the Palestinian territories and vehement domestic opposition in Israel.

Palestinians say Israel's refusal to freeze settlement activity in the West Bank sours the atmosphere for peacemaking. Israel says it can't abandon more territory without assurances against a repeat of what happened after it left the Gaza Strip two years ago: a takeover by Hamas militants and a constant barrage of rocket attacks from the lands Israel evacuated.

"You can't expect the Israelis, and I certainly don't, to accept a state on their border that would become a launching pad for terrorist activities," Bush said on the first day of a three-day trip to Israel and the West Bank _ his first visit to the Holy Land since becoming president.

At the same time, Bush said, "illegal" Israeli settlement outposts in the West Bank have got to go.

Bush's goal of forging an Israeli-Palestinian peace deal by the end of his term in January 2009 looks all but impossible with Hamas in control of half the Palestinian territory, Israeli Prime Minister Ehud Olmert relying on hawkish coalition partners to keep his government together and seemingly unbridgeable gaps between the sides on the core issues of their conflict: the borders of a future Palestine, a solution for Palestinian refugees and sovereignty in Jerusalem.

Prospects for peace are not totally bleak, however, because of the intolerable cost of failure: a great victory for extremists on both sides. And the good chemistry among the key players _ Bush, Olmert and Palestinian President Mahmoud Abbas _ makes progress possible.

The international community has pledged billions of dollars to boost the moribund Palestinian economy. Abbas insists he is making important strides toward reining in extremists. And Olmert has declared the establishment of a Palestinian state to be in Israel's supreme national interest.

Israelis and Palestinians agreed to relaunch long-stalled peace talks at an international peace conference hosted by Bush in Annapolis, Md., in November. Since then, the sides have fallen into their old pattern of using the talks to air mutual grievances rather than getting down to the business of peacemaking.

That, however, began to change on the eve of Bush's visit, when Olmert and Abbas met and announced they had agreed to begin discussions on the conflict's most sensitive issues.

Solving those issues would require each nation to renounce cherished convictions.

Israel would have to relinquish its claims on east Jerusalem, which the Palestinians insist must be the capital of their future state and without which no Palestinian leader could sign a final deal. Palestinians would have to drop their demand that refugees and their descendants from Israel's 1948 war of independence be allowed to return to their original homes inside Israel. That would endanger Israel's character as a Jewish state and no Israeli government would accept it.

These historic concessions might not be possible under the weak leadership of Olmert and Abbas.

And few believe they could happen without serious intervention from the Bush administration, which followed a hands-off policy during its first seven years.

"American foreign policy has been a disaster in the region. The U.S. has lost its standing, has lost its credibility, and the Arab and Palestinian public, the Islamic public as a whole, have all turned against U.S. policies," said Palestinian legislator Hanan Ashrawi.

The huge gulf between Israeli and Palestinian perspectives was evident in Bush's reception Wednesday.

Israeli children danced and sang, and Israel's president and prime minister, along with the entire Cabinet and the nation's chief rabbis, greeted him at the airport. In the Gaza Strip, on the other hand, thousands of Hamas supporters chanted "Death to America!" and watched an effigy of Bush go up in flames. Posters portrayed Bush with fangs, or sipping from a cup labeled "Muslim blood."

Few events could burnish Bush's legacy better than a breakthrough in solving the Israeli-Palestinian conflict during his final year in office. But the formidable challenges he faces were on stark display on Wednesday, when Palestinian militants fired at least 20 rocket and mortar shells from Gaza into Israel, and the Israeli military responded with attacks that killed three people.

Most of the crude rockets from Gaza are falling on a single, depressed town in southern Israel _ Sderot _ away from the Jewish state's major population centers. If West Bank militants began staging similar attacks, Tel Aviv and other top cities could well be hit.

That's the main reason Israel won't easily give up the West Bank, where it currently imposes strict travel restrictions on the local population _ helping to reduce suicide attacks inside Israel while at the same time stoking hatred and despair among Palestinians.

"There will be no peace unless terror is stopped. And terror will have to be stopped everywhere," Olmert told reporters after meeting Bush for two and half hours.

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Steven Gutkin is The Associated Press bureau chief for Israel and the Palestinian territories.

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