There’s plenty about which one could nitpick in President Bush’s proposal for peace between Israelis and Palestinians. On balance, though, his speech on Monday was about as protective of Israel’s interests as one could expect from a divided administration.

The onus is clearly on the Palestinians to demonstrate whether they truly want a peacefully co-existing state with democratic values and will commit to ending terror. Good luck. With the exception of Israel, no other nation in the Middle East has a history of democracy or is about to accept a Western model of government.

The president laid down a number of markers on the road to a Palestinian state indicating they are conditional to the success of such a state.

“The United States will not support the establishment of a Palestinian state until its leaders engage in a sustained fight against the terrorists and dismantle their infrastructure,” Bush said Monday. (emphasis mine)

He also strongly indicated that Yasser Arafat must go, that new elections should be held and that a Palestinian state should have a “new constitution, which separates the powers of government.”

As the target of terror and elimination, Israel presumably will not have to give back more land or do much else until progress is made toward these objectives.

In a phone conversation from Israel, former Prime Minister Benjamin Netanyahu told me he was mostly pleased with the president’s remarks. Netanyahu, who felt he was sandbagged by President Clinton into making concessions to Arafat without reciprocity at the Wye River, Md., summit meeting in 1998, said, “for the first time we have an American president standing up and putting the blame where it belongs and demanding a change of regime and a change of behavior on the part of the Palestinians, which is refreshing.”

What if Arafat wins in a new election? Netanyahu said, “President Bush took care of that when he said the next leadership will have to follow certain standards of responsibility. It’s not just a democratic election, which Arafat was never elected with. Even if he were, that is not enough by itself. We should put it squarely to any Palestinian leader that in order to be a candidate for any political negotiations with us, they would have to do two things: disavow the demand for flooding Israel with millions of Palestinians (known as “the right of return”) and practically sign up to an international program to rehabilitate the remaining refugees where they are and ending all of the propaganda against Israel, which can be monitored over time. Secondly, Arafat must end terror, which can also be monitored. My position is to then allow (the Palestinians) to have full self-government, but without those sovereign powers that could lead to the eradication of Israel.”

One of the issues Netanyahu says he’d like to hear from Bush about in future speeches is the limitations the president would like to see on a Palestinian state, “assuming (Palestinian leaders) meet all (Bush’s) tests.”

They won’t, of course, because the intention of much of the Palestinian leadership and its followers is not building shopping malls and prosperity, separation of powers, a constitution, freedom and peaceful co-existence with Israel. Their theology, as expounded by radical clerics, is that Israel has stolen land that is theirs (all of it) and that their God is ticked and wants them to use force to reclaim the land, which includes the murder of babies and grandmothers.

They see the West as decadent and Christians and Jews as enemies of God. How do you make peace when your enemy thinks like this? Palestinians will need the religious equivalent of a new revelation if they are to think differently. That would then require the next generation of children to be taught something other than martyrdom and the current generation to stop seeing Israel as a target for eradication.

My sense is that, for the moment, the Bush administration has changed the subject in the region from prodding Israel into additional concessions to pressuring the Palestinians to stop terror and institute democratic reforms. While he waits for an acceptable response, Bush may pursue other objectives, such as taking out Saddam Hussein.

Even if that’s not the case, Bush’s proposals condition any hope of a Palestinian state on changed behavior, changed thinking and a complete change in leadership. The Middle East is known for miracles, but this one is beyond belief.