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While the fate of Jerusalem hung in the balance, there was at least hope for peace between Israel and the Palestinians. But the failure to resolve the question of Jerusalem now appears to be having the expected consequences: The prospects for peace, at least in the short term, appear to be receding.

Having failed to reach an accord at either the second Camp David summit or in side talks at the United Nations millennium meeting in New York, both sides now are retreating toward old and tired positions. Israel Tuesday suspended peace talks with the Palestinians, and then quickly said it would resume negotiations. The Palestinians then called for a delay in talks set for today. This is no way to make a deal.

The summit collapsed over the fate of Jerusalem -- or more particularly, of East Jerusalem and its holiest site, the mount that is at once the third-holiest place in the Islamic world and the location of temples sacred above all places to Jews. Palestinians demand all of East Jerusalem as the capital of their own state. Although Israel reportedly agreed to Palestinian control over Arab neighborhoods in East Jerusalem, it refuses to relinquish sovereignty over the Temple Mount and the "unified, undivided and eternal capital" it gained by capturing East Jerusalem in the 1967 Six-Day War.

For a time there seemed hope in the face-saving idea of a city ruled by God, to whom both sides could acknowledge sovereignty while hammering out a workable administrative scheme. That seems less likely now. Even more disconcerting, both sides seem to be retreating from concessions apparently reached during the recent negotiations.

There's a hard lesson here. Once talks fall through, they can't be restarted at the same point. Ground once tentatively gained is abandoned, and both sides retreat toward harder stances. That's happening now as Israeli Prime Minister Ehud Barak deals with a volatile pre-election political situation and the Palestinian Legislative Council, having backed Arafat's temporary postponement of a unilateral statehood declaration, retreats from symbolic land swaps with Israel.

So tensions are high again on the West Bank and in the Gaza Strip as Jerusalem once again becomes an issue to be approached instead of discussed. The specter of stones and bottles is in the air -- again. That specter, however, is unlikely to last. It will either evaporate in an atmosphere of serious negotiations, or deteriorate into violence.

Both sides need to stop backsliding and look to the future. Each has much more to gain from a peaceful settlement with concessions than from bloodshed without them. For Palestine, there's the goal of an internationally recognized sovereign state; for Israel there is peace.

Right now, there's movement in the wrong direction.

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