Washington ? A Palestinian state is now recognized as a legitimate and desirable goal by the world’s most important leaders, including the president of the United States and the prime minister of Israel. This is a historic shift. But it must be accompanied by a similar mental earthquake in the Arab world for lasting peace to occur.

Three decades ago Israeli leaders — most notably Golda Meir — disputed the very existence of a “Palestinian” people. The residents of the West Bank and Gaza were “Arabs” who had never had and never would have a state, she told The Times of London. This came not long after Israel responded to direct threats to its survival by conquering its Arab neighbors in six days — 36 years ago this week.

Contrast that to Ariel Sharon’s formal acceptance of the goal of a Palestinian state by 2005 as outlined in President Bush’s “road map.” This is a conceptual breakthrough, however limited Sharon may intend that acceptance — and the Palestinian state — to be.

Bush also attaches strong conditions to his championing of Palestinian national aspirations through a two-state solution. They include demilitarization and halting terrorism.

“I destroyed a terrorist state in Afghanistan, I destroyed a terrorist state in Iraq and I am not about to help create a terrorist state” on Israel’s borders, the president is said to have told aides in discussions centering on security guarantees that Israel will need for peace.

But a paradox develops: At this highest crest of acceptance of a two-state solution since 1947 — when Israel adopted the original U.N. partition but Arabs did not — Arab leaders are increasingly edging away from openly recognizing Israel’s right to exist as a Jewish state.

That retreat is mostly disguised and conducted in diplomatic code. It nonetheless feeds the separate tides of anti-Israeli resentment and anti-Semitic hatred of Jews that are rising and fusing in Europe, the United States and elsewhere. Such behavior does not summon peace to the Middle East.

Arab leaders who met with Bush in Egypt on Tuesday did so on the condition that Israel was excluded. Earlier, Palestinian negotiators suggested they had turned down a proposed joint communique with the Israelis because the Palestinians objected to language that endorsed Israel’s existence as a Jewish state.

But such an endorsement was, in Sharon’s view, essential to peace. The Israeli prime minister had demanded that the Palestinians grant “a waiver of any right of return of Palestinian refugees to the state of Israel” to get talks started.

Sharon dropped this as a precondition for talking with the Palestinians, but still insists that a final agreement will have to include that waiver. In doing this, Sharon has identified what I think is the biggest obstacle that Bush will confront in the search for a Palestinian-Israeli settlement.

Three years ago this month, as Bill Clinton prepared for his Camp David II summit with Ehud Barak and Yasser Arafat, Israeli and Palestinian officials described to me a tentative compromise that they felt would be adopted at the talks.

The compromise would have allowed Arafat to claim that Israel had agreed to respect a formal “right of return” for the estimated 3 million members of the Palestinian diaspora, while in practice Israel would make the final determination on the relatively small number of tens of thousands of Palestinians who would be permitted to return. Only that arrangement could preserve Israel’s viability as a Jewish state.

Arafat, a creature of exile politics, refused at the last minute to swallow that bitter pill, which would have brought compensation for those who would not be resettled in Israel. He walked away from a settlement. And Arab leaders who have refused to take the politically risky steps of integrating the Palestinian refugees into their societies put no pressure on Arafat to accept that painful but necessary compromise.

No one can dispute that Palestinian refugees lead existences of daily suffering and humiliation. They deserve not only sympathy but also compensation for their dispossession, and a fresh start outside those awful camps.

For that to happen on the basis of an Israeli-Palestinian peace, Arab leaders will have to display courage and toughness that have been absent for half a century in dealing with their own publics about the Palestinians in their midst.

Egypt, Saudi Arabia, Syria, Lebanon and particularly the Palestinian Authority will have to abandon the fiction that the Palestinians in diaspora have an absolute and unlimited “right of return” into Israel. The Arab side must now also show concretely that it is committed to a genuine two-state solution.

Jim Hoagland is a columnist for Washington Post Writers Group.