WITH BRITISH Prime Minister Tony Blair at his side, President Bush yesterday offered a heartening commitment to pursue Palestinian democracy and statehood in the next four years -- with the former a condition for the latter. His promise to "spend the capital of the United States on such a state" should encourage leaders around the region who have despaired at U.S. inaction on that front during Mr. Bush's first term; his parallel pledge to work more closely with European allies on that and other initiatives also augurs a step in the right direction. We agree with the president about the paramount importance of Palestinian democracy: Unlike the Bush administration, we favored Palestinian elections even before the death of Yasser Arafat. Yet Mr. Bush's new and overwhelming emphasis on democracy as the solution to the Israeli-Palestinian conflict was a little troubling, because it seemed to minimize the fact that Israeli as well as Palestinian action will be necessary if the opportunity created by Mr. Arafat's death is to be seized.

The Israeli-Palestinian "road map" approved by Mr. Bush nearly two years ago envisioned steps toward Palestinian elections and other reforms, including a reorganization of security forces to fight terrorism. Those were to be accompanied by specific Israeli actions, including a freeze on further expansion of West Bank settlements. But when asked on Friday what steps Israel should take, and whether he favored a settlement freeze, Mr. Bush declined to answer, instead repeating his call for Palestinian democracy. In fact, as he described it, the president's new strategy allows Israeli Prime Minister Ariel Sharon to proceed with his plan for a unilateral withdrawal from the Gaza Strip, coupled with the expansion of major West Bank settlements and construction of a border-like security fence that will attach them to Israel.

Israeli withdrawal from Gaza would be a positive development. But Mr. Sharon's initiative was predicated on the notion that there was no Palestinian "partner" with whom Israel could negotiate -- and that Israel's unilateral steps would create a long-term roadblock to Palestinian statehood. With Mr. Arafat replaced, at least on an interim basis, by leaders who have opposed violence and endorsed the road map, that logic no longer applies. In fact, an important opportunity exists for Israel to reopen talks with the Palestinians and demonstrate that moves toward peace by a new leadership will be reciprocated. Mr. Sharon could immediately begin to negotiate the terms of Israeli withdrawal from Gaza, and he could talk about the route of the security fence and the redeployment of Israeli forces in the West Bank. He could also prove that he is serious about a two-state solution by ending the expansion of settlements and removing the new "outposts" he pledged to dismantle long ago.

As the Bush administration should have learned last year, when an attempt by Palestinian moderates to wrest power from Mr. Arafat failed, positive action by Israel and the United States is essential if pro-peace Palestinians are to prevail over those who favor continued warfare. Fair elections won't even be possible without Israeli steps to allow free movement and suspend its own assassination attacks; the most popular Palestinian leader now sits in an Israeli prison, where he is serving a life sentence. Unless there is a clear prospect that negotiations will lead to the early creation of a Palestinian state, the elections Mr. Bush so strongly favors will not bring an Israeli-Palestinian settlement any closer. A majority of Palestinians would probably choose a negotiated peace -- but only if the United States ensures that such a peace is a realistic possibility.