June 25, 2002 -- U.S. President George W. Bush has been adamant since Sept. 11 about stopping terrorism, but he took a firm step in the opposite direction in his speech yesterday.

He should have told the Palestinians clearly and unequivocally that their 21-month campaign of violence against Israel is unacceptable and must conclude before any discussion of rewards can be started. Instead, the President outlined his vision for a "provisional" Palestinian state and demanded an end to what he called "Israeli settlement activity in the occupied territories." Both of these constitute very major benefits to the Palestinians; as such, they represent rewards for suicide bombings, sniper attacks, and the other forms of terrorism.

This not only does grave damage to the President's proclaimed war on terrorism but it sends a signal to the Palestinians to expect further rewards for yet more violence. True, there was much in his presentation about the virtues of local elections, independent auditing and market economics, but the only message that will stick is a cruder one: Terrorism pays.

Bush's outline for action then went on to make a large number of mistakes about the specifics of the Palestinian-Israeli conflict. Here are some:

- Misreading Palestinian opinion: Bush declares that only a small minority of Palestinians subscribe to the means or views of the terrorists. "The hatred of a few holds the hopes of many hostage." But this is false; nearly every opinion survey, political speech, mosque sermon and other indication suggests that a substantial majority of Palestinians enthusiastically support the campaign of violence against Israel. This has the ominous implication that practising democracy, as the President calls for, would lead -- ironically -- to a more aggressive policy toward Israel.

- Moral equivalence: Bush implies a basic commonality between the plight of Israelis who suffer terrorism and the Palestinians who inflict it. "It is untenable for Israeli citizens to live in terror. It is untenable for Palestinians to live in squalor and occupation." To see the error of this statement, change it to "It is untenable for American citizens to live in terror. It is untenable for Afghans to live in squalor and occupation."

A political program cannot work if it is premised on errors.

- Victimology: Palestinians have "been treated as pawns" says the U.S. President. Not so: Since 1967, the Palestinians have had an increasingly autonomous and powerful voice in running their own affairs. Especially since the creation of the Palestinian Authority in 1994, they have been in control of their own destiny. To portray them as victims suggests they would behave differently once they have a formal state. In fact, every sign points to a continuation of the present policies.

- Good governance the key: "True reform will require entirely new political and economic institutions based on democracy, market economics and action against terrorism." This is a touching but naive belief in the wonders of decent ruling institution. To be sure, autonomous local leaders, multi-party elections and honest politicians are all to the good, but how might they lead to a reduction of hostilities? This view has things precisely turned around: Democracy, market economics and anti-terrorism will only follow on a far more fundamental change, namely a Palestinian willingness to accept the existence of Israel. A Palestinian state that continues to seek the destruction of the Jewish state by nature cannot be democratic.

- Overemphasizing terrorism: "There is simply no way to achieve [Palestinian-Israeli] peace until all parties fight terror." Palestinian terrorism has caused terribly tragedies but it is not the heart of the problem. Terrorism, after all, is but a tactic in the service of a war aim. That war aim -- the destruction of Israel -- is the heart of the problem. For example, it is perfectly possible to imagine a future Palestinian state that does renounce terrorism and instead builds up a conventional force of planes, tanks and ships with which to attack and destroy Israel. Along these lines, it is noteworthy that Bush did not call on the PA to reduce the size of its armed forces.

A house cannot be built from a blueprint that gets wrong the terrain, the size and shape of the plot, and the building materials. Likewise, a political program cannot work if it is premised on errors.

By rewarding terrorism, the Bush speech sets back the current war effort; by misunderstanding the Palestinian-Israeli war, it is rendered unworkable as a serious effort at conflict resolution. In all, it represents a disappointment and a missed opportunity.