Halevi's astute analysis of the current situation and how Israel can take the initiative and endorse freedom in the Arab world, with sobriety and resiliency. Israel Is Resilient but Watchful Amid the return of Palestinian violence and upheaval in the Arab world, there is broad consensus on issues such as land for peace. By YOSSI KLEIN HALEVI Jerusalem The ambulance sirens began sounding and didn't seem to end. The terrorist attack on March 23 that killed one person and wounded 30 was the first bus bombing in Jerusalem since 2005. And it happened just as missiles from Gaza began falling on Israeli cities and towns for the first time since the Gaza War of 2009. Suddenly it was as if the normal life we'd since managed to re-inhabit was an illusion. But the despair passed quickly. Two days after the bombing, 10,000 people—from as far away as Kenya, Ethiopia and Poland—jogged through Jerusalem in the city's first-ever international marathon. Residents lined the streets, cheering on the runners. Not one participant dropped out as a result of the bombing. After a brutal decade that began with the collapse of the peace process in September 2000, and which brought four years of suicide bombings, eight years of missile attacks, two wars, and at least two failed attempts at peacemaking, the Israeli public is resilient and sober. As terrorism and rocket attacks return to Israeli cities, and the Arab world reels, those are precisely the qualities Israelis need to cope. The precondition for containing terrorism is national unity, and on security matters at least, the nation is cohesive. In responding to attacks on civilian Israel, the government has the support of nearly every party. Knesset members of the opposition Kadima party are demanding that the government respond even more firmly—the left pressing the right to be resolute. Yet so far the government's response has been restrained—and rightly so. Another Israeli-Hamas confrontation is perhaps inevitable, but not now. As the Arab world finally begins to face itself, Israel must avoid focusing the region's attention on the Palestinian conflict. The upheavals have proven that what preoccupies the Arab peoples aren't Israel's actions but Arab failures. The dictators want to deflect their people's rage back onto Israel. Moammar Gadhafi, for instance, has urged Palestinians to board ships and descend on Israel's coast. This is also not the time for far-reaching political initiatives. With the open question of whether Israel's peace with Egypt will survive the fall of Hosni Mubarak, Israelis are reassessing the wisdom of land-for-peace agreements with dictators. What is the point, many here wonder, of exchanging the Golan Heights for a dubious peace with a Baathist regime run by the hated Allawite minority? Israelis are asking a similar question about Palestinian leader Mahmoud Abbas, who is widely resented by Palestinians as corrupt and represents at best only part of his people. Why negotiate a land for peace agreement with an unelected, one-party government? Prime Minister Salaam Fayyad is the first Palestinian leader to place economic growth before ideology, but he lacks a political base. In a time of regional change, Israelis are even more reluctant to risk irreversible strategic concessions for a deal that may well lack popular legitimacy. There is no basis now for an agreement. Claims in the media that Mr. Abbas and former Israeli Prime Minister Ehud Olmert were close to a deal are merely another example of the wishful thinking that once turned the late Palestinian leader Yasser Arafat into a partner for peace. Recently leaked documents from the Palestinian Authority reveal that Palestinian leaders continue to anticipate the "return" of hundreds of thousands of refugee descendants to Israel. No Israeli government will concede on what is, for the Jewish state, an existential issue. In the coming months, pressure to implement an immediate two-state solution will increase—from the United Nations, the European Union, and the Obama administration. Israel must resist that pressure. The premature creation of a Palestinian state—more precisely two states, ruled by the competing autocracies of Hamas and Fatah—will not bring peace but greater instability. Still, Israel must do more than passively await regional change. As the Arab world confronts its options of Islamism, democratization or military dictatorship, Israel needs to endorse freedom. Israel's contribution to the new democratic spirit should be sending an unequivocal message to the Arab world that it has no intention of continuing the occupation for ideological motives, and that the only impediment to Palestinian independence is Palestinian intransigence, especially on the issue of refugees. The least dangerous way for Israel to communicate that message is by declaring an open-ended building freeze in the settlements. That freeze would not include Jerusalem. No government—left, right or center—would stop building in East Jerusalem's existing Jewish neighborhoods. But a freeze should be unilateral—without expectation of reciprocity from the Palestinians. At the same time Israel should transfer control to the Palestinian Authority of more of the West Bank, and continue encouraging economic growth there. Prime Minister Benjamin Netanyahu's reluctance to impose another settlement freeze is understandable. His previous 10-month freeze—the first by any Israeli prime minister—was greeted with skepticism and brought only increased pressure from Washington to freeze building in Jerusalem. But regional conditions have since changed dramatically, and Israel needs to respond. Mr. Netanyahu cannot impose another freeze while maintaining his present coalition. So he should seriously examine the new offer of opposition leader Tzipi Livni to form a unity government between the prime minister's Likud party and Kadima. A combination of policies—military restraint, an unconditional settlement freeze, realism regarding a Palestinian state—will express the resolve and sobriety of the Israeli public. Israelis these days are preparing for Passover. The Passover seder is called a night of watching, in remembrance of the Israelites who were prepared at a moment's notice to flee Egypt and enter the unknown. This year Passover has particular resonance. For Israelis, living in a Middle East veering between freedom and even greater repression, it is a time of active watching. Mr. Halevi is a fellow at the Shalom Hartman Institute in Jerusalem and a contributing editor at the New Republic.