A statement by Yasir Arafat, printed on the facing page yesterday, was a powerful testament to the historic and moral case of the Palestinian national movement. Sadly, it was also a testament to the tragic failures of Mr. Arafat himself. In the wide gap between the assurances he offered — to end terrorist attacks on Israeli civilians, to help build two secure states side by side — and the policies he has pursued lies much of the explanation of why the Israeli-Palestinian conflict is on a march to catastrophe.

Mr. Arafat failed to engage a far-reaching Israeli offer in 2000. Since then, he has done far too little to stop the suicide bombings and other terrorist attacks, hardening attitudes in an increasingly hawkish Israeli government. We would be delighted to see Mr. Arafat live up to his newly restated commitments, but we harbor few illusions. That is why, in our view, there is an urgent need to find a solution that does not rely directly on Mr. Arafat, who seems to be a spent force as a peacemaker.

The question is how. One approach that seems to be gaining currency in Washington and Jerusalem, to isolate Mr. Arafat and sap him of authority, is chimerical and dangerous. For the last two months, with tanks, sharpshooters and now American approval, Israel has effectively turned Mr. Arafat into a prisoner in his own Ramallah compound.

This does no good. Only Palestinians can select their own leadership. Immobilizing Mr. Arafat will not foster a new generation of leaders. It will paralyze them, pushing them to share in his sense of entrapment and turning him into a symbol of victimhood.

We urge Israel to allow Mr. Arafat his freedom of movement while simultaneously negotiating the future with those around him. This will require care and subtlety and the help of the United States and perhaps Europe, Jordan, Egypt and Saudi Arabia. Israelis know well that there are many capable and forward-looking Palestinians eager to resume serious negotiations. None will be able to do so, however, while Mr. Arafat is besieged.

The Palestinians must face up to their substantial failings. They have not taught their young the virtues of peaceful coexistence and have refused to face the legitimate security fears of the Israelis. Many Palestinians around Mr. Arafat as well as many spread through the Palestinian Legislature and Authority and universities know very well that he has let down his people. He has allowed corruption to flower and trampled on fragile democratic institutions. In turn, those around Mr. Arafat have not had the guts to take risks for peace.

On the Israeli side, Ariel Sharon has found himself in a grim situation since his election as prime minister a year ago. Palestinian suicide bombers have killed and maimed Israelis while Palestinian leaders have made few serious efforts to stop the attacks. The capture at sea in early January of 50 tons of Iranian weapons headed for the Palestinian Authority destroyed what little remaining faith Israelis had in Mr. Arafat.

Unfortunately, Mr. Sharon has let down his own people by failing to articulate a vision for the future. Israelis and Palestinians are fated to live next to one another on a thin, parched strip of land. Neither people can conquer or absorb the other. Yet, as prime minister, Mr. Sharon has thus far relied mostly on military tactics. We hope his discussions last week with three leading Palestinian negotiators will lead to a different approach. Israeli troops appear increasingly unrestrained in their destruction of Palestinian property, notably the institutions and structures of the Palestinian Authority.

Though this page has long supported the legitimate security interests of Israel, we judge its current policies to be ill conceived. The growing harshness of Israeli military practices in the West Bank and Gaza is creating thousands of potential suicide bombers and Israel haters as well as coarsening a generation of young Israeli soldiers. The endless growth of Israeli settlements in the West Bank and Gaza Strip is depriving Palestinians of hope. Israel must vigorously fight terror to protect its people. But the destruction of hundreds of houses, the innumerable roadblocks and daily Palestinian humiliation aimed largely at protecting the settlements are counterproductive.

There are alternatives to the Israeli policy. Terror can be combated without humiliating nearly every Palestinian inhabitant of the area. Mr. Arafat can be subjected to diplomatic rebuffs without demeaning all Palestinians. Instead of talking wistfully of how he wished he had killed Mr. Arafat two decades ago, Mr. Sharon owes it to his people to tell them that their future must involve dignified national self-determination for a neighboring Palestinian state not carved up by Israeli settlements.

Israel needs a partner to make peace. Mr. Arafat appears less and less to be that person. The Palestinians deserve courageous leaders eager to negotiate responsibly. The Israelis must help those Palestinians by showing them that a genuine peace settlement awaits them. Without that, the killing will go on.