BEIT SAHOUR, West Bank -- The sounds emerging from the interior of a warmly lit Palestinian house in this village are even and earnest, not bitter, as if nothing has changed between the Israelis and Palestinians within who have been meeting to talk out their differences for more than a year.

But things have changed. Shlomo Elbaz, a craggy-faced Israeli born in Morocco who heads the Sephardic group "East for Peace," whispers an aside at the close of a meeting that focused not on Israeli-Palestinian issues but on Palestinian support for Saddam Hussein:

"I came here to listen for an argument that I could take back and use to convince others. And I haven't heard one."

He asks Ghassan Andoni, an articulate and strong-minded Christian moderate from Beit Sahour, to come and speak at the home of Andre Chouraqui, a former deputy mayor of Jerusalem and "one of those who have stopped talking to Palestinians" since the invasion of Kuwait. Andoni agrees.

"Our work has become very difficult. We have to do something," Elbaz tells Andoni.

"Sure. Fair enough," the Palestinian responds.

"So, you'll be . . . diplomatic."

"I'll be honest," Andoni says. "I'll be polite."Elbaz says testily, "We don't just want honesty for the sake of honesty. We want to make progress."

Progress has become exasperatingly difficult for activists in the Israeli peace camp, a loose definition for those leftists who favor territorial compromise with the Palestinians and who have advocated talks with the officially banned Palestine Liberation Organization.

Frustrated, the left is now caught between Saddam Hussein and the intifada, the nearly three-year-old Palestinian revolt. The uprising continues unabated, as Monday's apocalyptic bloodshed on the Temple Mount reminded Israelis. With their 19 new martyrs killed in the shadow of one of Islam's holiest shrines, the Haram as-Sharif, the Palestinians have shown that they are still willing to sacrifice blood -- their own and that of Israelis -- to oppose the occupation.

Israelis on the left are all too aware that the problem in their backyard remains unchanged. But since Palestinians in the occupied West Bank and Gaza Strip spontaneously demonstrated their support for Saddam, these Israelis feel powerless to change things. For the first time since a mass peace movement has existed in Israel, the peace camp is divided. It admits to crisis. Many activists have lost their taste for compromise and walked away from the Palestinian problem. Many will press on with their efforts, if with less enthusiasm or hope.

But all feel that the painstaking work they invested over years to try to convince the Israeli mainstream that the Jewish state might live more safely without the occupied territories, and that the PLO has changed and is a viable interlocutor for the Palestinians, has been wiped away in a stroke.

"Any identification with Saddam -- however nuanced -- represents an identification with a violent solution to the Palestinian-Israeli problem, to put it nicely. It has greatly weakened our ability to legitimize the PLO as a credible negotiating partner," says Gabriel Bar-Gil, head of the Peace Now movement in Jerusalem.

An embittered peace activist, who asked not to be identified, put it more bluntly. "We had the illusion that we were moving history, that we had an impact," she said. "And suddenly things have happened over which we have no control."

The Israeli peace camp was not born of a desire to reach accommodation with the Palestinians. It appeared briefly after the war of October 1973, then fell silent. Nine years later, it grew suddenly of the despair of Israel's military foray north in 1982, the Lebanon War.

At the grass-roots level, the peace movement was motivated by Israelis' desire to be part of a "normal" society, free of constant worry from terror attacks and war. But the focus of the movement changed with the advent of the Palestinian uprising. A new willingness by Palestinians to deal with Israelis led to unprecedented cooperation between Israelis and Arabs; Israeli horror at the abuse of Palestinian human rights by the army and civil administration led to an explosion in the number and activity of human rights defense groups.

When the Palestine National Council voted in the fall of 1988 to recognize Israel, and when in November of that year Yasser Arafat in Geneva told reporters that he recognized Israel and renounced terror (a statement that led the United States to open a dialogue with the PLO), Israeli leftists rejoiced.

Gradually more Israelis accepted the taboo notion of talking to the PLO, or at least questioned the government's belief that Israel could indefinitely avoid the organization. Ezer Weizman, a government minister, lost his job for talking to the PLO. According to the count of the Citizen's Rights Movement, a leftist party in Parliament, by last summer 30 members of Parliament had publicly supported talks with the PLO.

That was until Saddam Hussein took over Kuwait. Palestinians in the territories waving pictures of Saddam Hussein were like a pin in the inflated hopes of the Israeli left. Arafat, embracing Saddam on arrival in Baghdad the week of the invasion, reinforced the sinking feeling in the stomach of the peace camp.

Palestinians claim that street-level support for Saddam did not take hold until President Bush decided to send in U.S. troops. Palestinian leaders in the West Bank -- as the PLO -- issued a statement condemning Iraq's invasion of Kuwait but also the American presence in Saudi Arabia, about two weeks after the invasion. For most observers in Israel, it was two weeks too late. The Palestinians have failed to convincingly present themselves as anti-Saddam, or even neutral in the crisis.

The result has been catastrophic for relations between Israelis and Palestinians. Yossi Sarid, a dovish parliamentarian who had previously advocated official talks with the PLO, launched the debate with an acid article in the Haaretz newspaper:

"If one can support Saddam Hussein . . . maybe it's not so bad to support the policies of {Prime Minister Yitzhak} Shamir, {Absorption Minister Ariel} Sharon and {Former Defense Minister Yitzhak} Rabin. In comparison with the misdeeds of Saddam Hussein, the sins of the state of Israel are as white as snow," he said, informing the Palestinians: "Until further notice, they can come looking for me."

At least some of the left's activities have stopped. The efforts of groups like Women in Black and Stop the Occupation have trickled to a minimum. Peace Now scotched a campaign planned for October to issue a joint statement with Palestinians in the West Bank: "We Palestinians and Israelis believe that only through negotiations can real peace be achieved."

After the invasion, it seemed beside the point.

Says Sarid: "There is a new Middle East today, with new commitments, and I think the PLO is going to be standing last in line . . . . Before, we {the peace camp} thought that the road to stability was via Palestinians and Israelis. Perhaps now we see that it lies in negotiations with Syria."

In some ways, the paralysis of the Israeli left as a result of the Gulf crisis resembles the impotence of the American left in the aftermath of the Cold War. If deterrence worked, how do you answer the William F. Buckleys of the world? Ran Cohen has that problem.

Cohen, an Iraqi-born parliamentarian from the Citizen's Rights Movement (Ratz) Party and a veteran of what he calls the war for peace (police have twice opened his head during heated demonstrations), admits he did not fare well in a recent television debate against Tzachi Hanegbi, a young buck in the ruling Likud Party.

"What could I tell him?" says Cohen. "I couldn't say that if the government was talking to the PLO this might not have happened. There is this lack of a partner. Suddenly I have no partner -- suddenly he's twisted and ugly and has sharp teeth."

Cohen is also a veteran of the Israeli-Arab wars in 1973 and 1982 and a colonel in the parachutists. He is swarthy, smiles a lot and wears sneakers to Parliament. Cohen has supported talks with the PLO since 1967 and has, illegally, met members of the organization abroad.

"With the stance of Arafat today, there is no chance in the world of convincing the Israeli public to negotiate with them {the PLO}," he says. "This is not an emotional disappointment, it's a problem of substance. The PLO has taken an axe to the peace process." And unfortunately, he adds, there is no alternative to the PLO.

Privately, leading Palestinians in the West Bank admit that the PLO was far too late in condemning the Iraqi invasion of Kuwait. But few apologize for their support for Saddam, the first Arab leader in years who appears strong enough to challenge Israel.

Israeli analysts now talk of probing a peace accord with Syria, unthinkable just three months ago. Others fear (some are encouraged) that after the Gulf crisis is resolved, Israel will be pushed into an international conference where all the regional conflicts might be taken up.

But both sides realize that peace between Israelis and Palestinians seems more elusive than ever. And in Beit Sahour, where Palestinians and Israelis still gather periodically to look one another in the eye, the process has become complex and bewildering.

A ruddy Hillel Bardin, in lumberjack's checked flannel overshirt, has brought his group by Arab bus through the cool Jerusalem night along the Path of Hebron through Bethlehem, and down the hill toward the blinking lights of the Palestinian village. Bardin initiated the dialogue groups early in the intifada. He was jailed once for his activities; his phone is tapped by Israeli security.

Paradoxically, at this first dialogue since the Iraqi invasion, the turn-out is unusually large. Fawzi Jumaa, a lecturer at Bethlehem University, welcomes his twenty-some guests with fruit and sweet tea, then coffee and Palestinian cigarettes. One religious Israeli couple brought their eight-month-old daughter, who plays smiling on the floor beneath the flying rhetoric.

"The Palestinian peace camp has done much more than the Israeli peace camp in terms of affecting attitudes and offering proposals," argues Ghassan Andoni.

Bardin responds, "The Palestinian movement has not thought about the problem of influencing Israeli public opinion. That has been given a very low priority. We can't tell our friends that the intifada is a peace movement; they'll laugh at us."

The conversation abruptly turns to Saddam Hussein. One Israeli says, "I think the issue is, if you really want to help us, stop saying you'll destroy Israel."

Andoni says, "Here's my analysis. If I were in the PLO I would be upset to see Iraqi military power destroyed. I dislike Saddam's personality, but I don't want to see his power destroyed because I see him playing a role in bringing peace to the area."

"You only think of power," the Israeli says.

"Can't you see why the Palestinians seek a deterrent power? To stop the maniacs in your government. Must I be the only victim in the area?"

Later Andoni tries to draw a positive lesson from the breach. He says that as a result of the Gulf crisis Palestinians and Israelis may gain a better understanding of one another; the Israeli doves will have grown up a bit. They will recognize the Palestinians for who they are, not for who they want them to be.

"We have to deal with these issues," he says. "We thought the Israeli left were these superhuman defenders of human rights. We thought we were facing a situation together and now {for the Israelis} it's like, 'Hey, come on, we didn't know you were like this.' We should know that this is me and that's you and that we have to talk. It might be dangerous, but it makes our relations more real."

Sharon Waxman is a Paris-based free-lance writer.