In some ways, it seems little has changed - the suicide bombings continue, as do the Israeli military incursions and targeted assassinations of suspected Palestinian militants.

A year ago, as the U.S.-led invasion of Iraq was set to begin, there was much anxiety here. Israelis carried their gas masks with them as they went about their daily tasks, just in case Saddam Hussein launched a chemical or biological attack. Patriot missile batteries manned by U.S. soldiers stood at the ready to defend against Scud missile attacks that never came.

Many Palestinians were emphatic that Iraq would not crumble under the American assault. But then the war began, and within just weeks Saddam Hussein had fled and his government fell. Israelis breathed a sigh of relief. Palestinians, along with most Arabs were astonished and dismayed at how quickly Iraq's military disintegrated before the U.S.-led onslaught.

Even though Saddam Hussein is gone from the scene, Iraq remains unstable and a continuing concern for many other countries in the region. But not in Israel, where there is general agreement that the war had a positive effect. Retired Israeli Brigadier General Shlomo Brum is a military and security analyst at Tel Aviv University's Jaffee Center for Strategic Studies. He says there is no doubt Israel benefited from the war.

"You know, traditionally, the Iraqi military power used to be the biggest, or among the biggest in the Arab world, and there was a good probability that this military power would be used against Israel in a military confrontation between Israel and an Arab coalition," he said. "This threat was removed, and it created a situation in which Israel is actually facing no conventional and military threat of any sort in the Middle East."

Most Palestinians and most Arabs across the region were vehemently opposed to the Iraq war, and saw it as an American scheme to help Israel, to gain control over Iraq's oil resources and, in general, to increase what is widely seen as America's strong influence in the Middle East.

They dismiss Washington's assertions that the removal of Saddam made the world safer, and they point out that no weapons of mass destruction have been found in Iraq, no links between Saddam and al-Qaida have been proven and that there has been an influx of Islamic militants into Iraq since the war.

Prominent Palestinian political figure and publisher Hanna Siniora says there is no doubt the Iraq war had a negative impact on the Palestinian issue.

"By the creation of another conflict in the area, it sort of marginalized the issue of the Palestinian conflict with Israel, and in a way, shelved it, until things can be put in order in Iraq, which looks like it's going to be in the long stretch, and not in the near future," he said.

Many Palestinians also argue that American preoccupation with the Iraq war gave the Israeli government a freer hand in dealing with the Palestinians.

But Palestinian artist and academic Ali Qleibo says the crucial issues for Palestinians are not linked to the Iraq war, but rather to the September 11th terrorist attacks against the United States.

"Out of the 11th September, there was the fight against terror, and it was very easy to label people and nation-states as terror bases, or states as cooperative with peace," he said. "The Palestinians have been labeled as a terrorist people, and this kind of labeling, this . stereotyping within the overall context of the American foreign policy justified the Israelis in their oppression of the Palestinian people, in escalating the violence to a level that has made life almost untenable here."

At the outset of the Iraq war, there was some hope in the region that, afterwards, Washington would turn its attention to the Israeli-Palestinian conflict. In June of last year, President Bush came to the region to join with Israeli Prime Minister Ariel Sharon and then Palestinian Prime Minister Mahmoud Abbas to launch the so-called "road map" to peace. But the road map has gone nowhere, as each side blames the other for the stalemate.

Prime Minister Sharon now says he will implement a unilateral disengagement plan, if peace efforts continue to be stalled. His plan would include dismantling most, if not all, Jewish settlements in the Gaza Strip, and perhaps in some parts of the West Bank. While the Palestinians say they will welcome any Israeli withdrawal, they are suspicious of Mr. Sharon's intentions, oppose unilateral action and, instead, want a negotiated settlement.