Among the variegated arguments made by the Bush administration and its supporters for war with Iraq was the suggestion that it would somehow lead to peace between Israel and the Palestinians. This was not wholly insincere. Colin Powell, the US secretary of state, is genuinely committed to the peace process and for a few months after the fall of Baghdad it seemed that President George W. Bush, too, had been won over to this conviction.

What the latest tragic developments in Israel and the Palestinian territories have demonstrated beyond reasonable doubt, however, is that neither the present US strategy nor the level of real US commitment is remotely adequate to bring about a settlement to this conflict. Above all, the US must recognise that the incremental approach to a settlement, on which both the Oslo process and the present "road map" are based, has failed utterly.

If there is to be any chance of a stable peace, the US administration must state clearly, irrevocably and in detail the contours of the final settlement that it wishes to achieve and then bring steady, consistent pressure on both sides to accept it. This is, after all, how the US brought about peace settlements in Bosnia and elsewhere.

Any such US statement and strategy would have to focus on two central issues: the Palestinian right of return; and the borders of a future Palestinian state. An overwhelming consensus concerning these issues now exists among reasonable and neutral observers of the conflict but they have been ducked both by successive US administrations and by a majority of the US political classes and media. Without absolute clarity on both, there can be no peace, ever. Writers on either side who emphasise one point while failing to mention the other are disingenuous.

Concerning the right of return for Palestinian refugees and their descendants, it must be clear that it is a precondition of a settlement that this be abandoned. It is unacceptable to the overwhelming majority of Israelis - and understandably so. For, given demographic realities, if admitted it would lead to the Jews becoming a minority in Israel itself. At most, there can be a return for very limited numbers, based on family reunification, for Israeli citizens of Palestinian descent.

For the US to state this publicly would reassure moderate Israelis and strike an important propaganda weapon from the hands of Israeli extremists and their allies in the west. Equally importantly, it would allow the US to begin putting together a serious international compensation package for the refugees. If on a sufficient scale, and properly administered, this could reconcile most refugees to life in their present homes and could make an important contribution to the prosperity not only of a future Palestinian state but of Jordan as well. This would be the time for Europe to put its money where its mouth is and pledge most of the funds for this package.

Such a US strategy would, however, be pointless if not accompanied by public clarity on the second crucial issue: the borders of a Palestinian state and the consequent removal of many Jewish settlers. It must be apparent that for such a state to be viable and acceptable to a sufficient number of Palestinians, these borders must run along the borders within which the Israeli state was recognised by the international community after the 1948 war, with limited mutual adjustments and special arrangements for Jerusalem.

Only a US promise of such a future state can give Palestinian leaders the incentive and the authority to crack down on their own extremists. As long as US silence allows Palestinians to believe that Ariel Sharon, the Israeli prime minister, and his followers may be allowed to implement their apparent plan to restrict Palestinian sovereignty to a state including only 42 per cent of the West Bank, and as long as the extension of settlements continues, any peace process will be doomed from the start.

No Palestinian leader or group could accept such a "state". Nor would Nato or the United Nations be prepared to provide a peacekeeping force if they thought that this was the peace they were going to be asked to keep.

US public commitment to such a Palestinian state would not imply abandoning Israel. On the contrary, it should be absolutely clear that before any treaty could be signed and an Israeli withdrawal could take place, the settlement would have to be ratified by a Palestinian referendum. A Palestinian authority would also have to demonstrate real willingness and ability to restrict terrorism.

Zbigniew Brzezinski, President Jimmy Carter's national security adviser, has argued that the US involvement in Iraq may at last compel Washington to understand the damage that the Israeli-Palestinian conflict is doing to the US position in the Middle East and to take decisive action to end that conflict. Unfortunately, the US political system as a whole may be incapable, without help, of taking such action, due to the power of the Israeli lobby and other factors. The US will therefore need to come under additional pressure from Europe and Washington's need for help in Iraq now gives Europe the opportunity to bring such influence to bear.

The Bush administration used to claim that "the road to Jerusalem runs through Baghdad". Now is the time for Europe to respond that the road to Baghdad runs through Jerusalem.

Reprinted with permission from the Financial Times.