Yasser Arafat is free. But whether his personal liberty translates into freedom for his people — and peace for Israel — depends on a complex and perilous diplomatic dance between the U.S., the Saudis, the Israelis and the Palestinian leadership, a dance made all the more delicate after a fire broke out near the Church of the Nativity during a firefight between Israeli troops and Palestinians inside. Six men wanted by Israel left Arafat's Ramallah compound Wednesday in the custody of U.S. and British officials who will oversee their confinement at a Palestinian Authority prison in Jericho. On Thursday, in keeping with the plan accepted by both sides under strong pressure from the Bush administration, Israeli forces withdrew from Arafat's office, and the Palestinian leader is now free to travel again for the first time since last December.

While the end of the siege marks a personal victory for Arafat over Sharon's efforts to sideline him, it also makes the Palestinian leader's political life infinitely more difficult. Arafat will be expected, by the Americans with some degree of support from the Saudis and other moderate Arab leaders, to contain Palestinian rage and crack down on militants even as he tries to rebuild his battered political, administrative and security structures. And despite Arafat's newfound freedom of movement, most West Bank Palestinians are still living under siege — the Israeli army remains encamped around most Palestinian towns, tightly controlling access and launching new incursions in response to security threats. There are also signs of mounting internecine rivalries on the streets, not only in the form of Hamas, Islamic Jihad and the more militant elements of Fatah challenging any movement toward a cease-fire, but also turf battles among security services loyal to rival strongmen.

The Ramallah deal is part of a broader attempt by the Bush administration, in concert with the Saudis, to calm the crisis in the Palestinian territories and revive movement towards Palestinian statehood. Media reports suggest President Bush and Crown Prince Abdullah have agreed to work together on a plan involving an end to all current Israeli incursions into Palestinian territories, a cease-fire and a renewal of negotiations over Palestinian statehood based on proposals brokered by the Clinton administration and discussed by the two sides at Taba through January 2001.

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nginx/1.14.0 (Ubuntu) According to published reports of the Taba discussions, the Israelis and Palestinians agreed that "the June 4 1967 lines would be the basis for the borders between Israel and the state of Palestine." Negotiations over annexation by Israel of West Bank settlement blocs close to the 1967 border in exchange for Israeli land elsewhere were inconclusive, as were talks over the refugee issue and the precise terms of sharing sovereignty in Jerusalem — although the two sides agreed in principle to Israeli sovereignty over the city's Jewish neighborhoods and Palestinian sovereignty over its Arab neighborhoods, with the city serving as the capital of both Israel and Palestine.

But getting the two sides back to negotiating such a far-reaching solution is a Herculean political challenge. Given the political climate in the West Bank following Israel's "Operation Defensive Shield," Arafat will likely demand greater Israeli withdrawal as a precondition for any cease-fire. But while ending the siege of Arafat was a symbolic gesture Israel could undertake at little tactical cost, the Israelis may be more reluctant to relinquish the ability to send troops into Palestinian towns at a half hour's notice in response to any specific attack or threat.

Bush is due to meet Sharon at the White House next week, and is expected to press the Israeli leader to enter far-reaching negotiations with the Palestinian leadership over a two-state political settlement in the near future. While Sharon may have reluctantly, and sometimes ambiguously acceded to pressure from Bush on specific demands, he has repeatedly emphasized his rejection of withdrawal to 1967 borders or the removal of settlements. Pressure from his own political base will likely limit the extent to which he can be drawn into a bold search for a solution compatible with Taba and the Arab League's peace plan. And Sharon may be calculating that pressure from Capitol Hill will moderate the demands the U.S. president is able to put on Israel.

The stalled U.N. fact-finding mission to Jenin further muddies the diplomatic waters right now. U.N. Secretary General Kofi Annan has scrapped the mission in the face of Israel's refusal to accept its terms. But some Israeli officials claim President Bush offered Sharon support in its dealings with the U.N. over Jenin as an incentive to lift the siege of Ramallah. Israeli officials fear that the Security Council may now call for a more far-reaching inquiry, which could leave the U.S. in a delicate diplomatic situation. It certainly won't help Washington's international standing to use its veto against a resolution designed to enforce a fact-finding mission initiated by the U.S.

Despite the difficulties and setbacks, there's a mounting sense in diplomatic circles that the common geopolitical interests, and accord among the leadership, of the U.S. and the Arab world in resolving the Israeli-Palestinian conflict may have created an unprecedented opportunity to break the logjam. But the extent to which that opportunity is realized may depend, in large part, on how much the Bush administration — and its Arab and Israeli allies — are willing to risk in the traditionally thankless pursuit of Middle East peace.