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On a plot of ground the size of New Jersey, Israel and the Palestinian territories—one young and strong, the other weak, an unrealized nation—are locked in a contest for land and resources so bitter that any compromise, even acknowledging the other's right to exist, seems an admission of defeat. Only rarely—during the Oslo negotiations of the 1990s, for example—have the combatants embraced a future based on hope and mutual goodwill. The Oslo Accords were built upon what seems an obvious solution: two peoples living in peace and security, with the Palestinians abandoning their guerrilla war against the Jewish state and the Israelis relinquishing Palestinian land captured in the Six Day War of 1967. As always, the devil is in the details—borders, sovereignty over Jerusalem, access to religious sites, the sharing of water and other resources, the dismantling of settlements, the plight of Palestinian refugees, security guarantees for Israel. After the peace process collapsed in 2000, hard-liners on both sides rose to power, and today the prospects for a two-state solution are dimmer than they have been in decades.

No wonder outsiders throw up their hands and pronounce the Holy Land rift beyond repair. After all, they often say, Arabs and Jews have been fighting for thousands of years. Although it's true, according to the Bible, that the ancient tribes of Israel battled Canaanites and Philistines for possession of this land millennia ago, today's conflict has its roots in the past century, when two world wars reshaped the political landscape, causing earthquakes in the Holy Land and rerouting the rivers of history.

Before World War I the territory lying between the Jordan River and the Mediterranean Sea was part of a poor, neglected province of the Ottoman Empire administered from distant capitals. Palestine is "a hopeless, dreary, heart-broken land," wrote a disillusioned Mark Twain, visiting the Holy Land in 1867. Little had changed by the turn of the 20th century, except that Palestine had begun attracting a small but determined stream of immigrants from overseas. In the midst of about half a million Palestinian Arabs grew a community of some 55,000 Jews, many of them poor farmers who had been driven out of Russia by the brutal anti-Semitic pogroms of the 1880s. Some of the newcomers were adherents of the Zionist movement of Hungarian-born journalist Theodor Herzl (1860-1904), which maintained that the only way Jews would ever be secure was to resettle their biblical homelands around Mount Zion (Jerusalem) in Palestine, from where nearly all Jews had been expelled by the Romans in the second century A.D.

During the "war to end all wars," which pitted Germany and its Ottoman allies against an alliance that included Great Britain, France, Russia, and the United States, European powers entered into a number of messy agreements that helped stoke conflict in the Holy Land. In return for their support against the Ottoman Turks, for example, Britain secretly promised Arabs in the region a vast nation of their own, even as it was conspiring with France to divide the same land into spheres of colonial influence. And in 1917 Britain was persuaded by Zionist proponents at home and abroad to issue the Balfour Declaration, committing the British government to the establishment of a Jewish homeland in Palestine. The decision sent shock waves through the Arab world.

In the peace agreements ending the war, the 600-year-old Ottoman Empire came to an end, its territories assigned to modern Turkey or to European colonial powers, whose subjects aspired to eventual nationhood. Yet even as European diplomats, consulting their Bibles, drew lines on the map subdividing the Middle East (with Palestine and Transjordan assigned to Britain, and Syria and Lebanon to France), some of the Holy Land's new rulers worried about the responsibilities they were taking on. Even Lord Balfour, author of the 1917 declaration, fretted about "the complicated and contradictory character of the public engagements into which we have entered."

The Zionist movement sensed a historic opportunity in the turmoil. Jewish immigration to Palestine, a trickle before the war, would become a flood, with a total of 630,000 Jews living in British-administered Palestine by 1947. Stunned by the growing influx, Arab Palestinians reacted with riots and sporadic violence in the 1920s and launched a full-scale uprising from 1936 to 1939. Jewish leaders in Palestine were divided over how to deal with the Arabs. Some sought territorial compromise, while others—alarmed by the rise of Nazism and the plight of Jews in Europe—began stockpiling arms and attacking both Arab Palestinians and the British authorities. As the world lurched toward another global conflagration, the threat of civil war in Palestine caused Britain, reeling from the Great Depression and increasingly exhausted by its imperial adventures, to start looking for an exit.

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