NEWS ANALYSIS : Many Arabs and Israelis Losing Hope for Coexistence : Occupied areas: With the uprising in fourth year, patterns of tribal conflict have hardened.

The sight of an Israeli mob beating up an Arab bus passenger during last month’s violent funeral of slain far-right Rabbi Meir Kahane was shock enough. Equally jolting was the sight of onlookers who were not members of Kahane’s anti-Arab movement cheering on the attackers.

But perhaps just as surprising was the Machiavellian reaction of some Bethlehem activists in the intifada , or Palestinian uprising, as they reflected on the cycle of communal violence between Arabs and Jews.

“This is good for us,” said Yacoub, a young tissue-paper salesman, even as he admitted being afraid to travel in Jerusalem where he peddles his wares. “Now everybody knows that we cannot live together.”

With the Arab uprising against Israel’s hold on the West Bank and Gaza Strip now in its fourth year, patterns of tribal conflict have hardened on both sides. Few observers, Israeli or Palestinian, can remember a time when symptoms of communal war emerged with such clarity.

On Dec. 14, three Israeli workers were stabbed to death at an aluminum factory in the coastal town of Jaffa, touching off a wave of attacks against Arabs and Arab-owned vehicles in Jaffa and nearby Tel Aviv.

On Dec. 1, three Palestinians on a bus in Tel Aviv knifed and killed an Israeli passenger and wounded three others before a police officer boarded and shot one of the assailants to death. The attack followed by a day the death of an Arab woman in Jerusalem, a mother of five, who was shot in the head by a police officer after she tried to stab him near the Damascus Gate in Jerusalem’s Old City.

Last month, arsonists firebombed an Israeli store that employed Palestinians. To avoid such intimidation, shopkeepers in Jerusalem have begun to hang signs outside their stores that proclaim: “No Arabs Work Here.”

In the wake of such incidents, there is a growing feeling that every encounter of an Arab and Jew holds the threat of violence and that the two peoples must be kept apart. At the same time, an imperative for closing ranks has taken hold in each community. Hope for coexistence, the elusive dream of liberal thinkers, is being swamped by an exclusionary mood. Taking a position on the middle ground is seen as betrayal, and moderates are in retreat.

“The cleavage between both sides is deeper than ever,” historian Shaul Friedman said. “Even if you wish to negotiate, the attitudes of extremism make it most difficult.”

During these recent months of strife, an odd confluence of opinion has developed among Israelis and Palestinians, left and right, moderate and extremist: They all talk almost exclusively of the virtues of separating Arabs in the West Bank and Gaza from Jews in Israel. Coexistence, dialogue, elections appear to be part of a dead language.

“Our immediate task is to separate, once and for all, or else this land will return to chaos,” said Yossi Sarid, a left-wing member of the Knesset (Parliament), expressing a new muscular line among Israeli doves.

Hard-line Israeli politicians on the right voice a similar demand but with an eye toward eventual expulsion of the Arabs from Israeli-held land.

“I’m happy all of the public has concluded there needs to be a separation of peoples,” said Rehavam Zeevi, a member of Parliament who favors mass expulsion of Arabs.

During four days in October, Israel closed off the West Bank and Gaza and forbade Palestinians to cross into Israel to work. In effect, the government of Prime Minister Yitzhak Shamir temporarily undermined its own position that Arabs can live in intimate, submissive contact with Israelis through some form of limited self-rule. It looked like a step toward unilateral disengagement.

Seizing on the contradiction, Palestinian political leader Faisal Husseini commented: “Palestinians from the beginning of the intifada were working for disengagement, and now I think that the Israelis are for this.”

Parallel with the impulse to separate is an equally clear growth of an us-or-them attitude on each side.

In Israel, civilian and army attacks on Palestinians are treated with more and more leniency by courts and government officials. Israel has long been under fire from human rights groups and the U.S. State Department for the light sentences given soldiers and civilians for assaulting Arabs.

In October, one soldier charged in the beating death of a Palestinian in Gaza received a two-month sentence. Other soldiers who were involved received no jail time, and top army officials have called for an amnesty for all cases of abuse that took place in the early months of the intifada.

During last autumn’s wave of violence, a mob of Israeli civilians beat to death a Palestinian who stabbed and wounded two female Israeli soldiers. Police said they could not charge any of the Israelis with a crime because they could not decide who was responsible for the death, even though some of the participants described their roles in radio interviews.

Earlier in the year, Rabbi Moshe Levinger, an ultranationalist West Bank settlement leader, received a five-month sentence for shooting to death a Palestinian store owner.

Liberal observers say they view the erosion of the letter of the law as a threat to Israeli democracy and an opening to fascism.

“In all countries in which democracy collapses, it is the willingness to forgive such abuses that is the first step to collapse,” said Zeev Sternhell, a political scientist at Hebrew University.

To some critics, the government’s investigation of the Oct. 8 police killings during riots on Jerusalem’s Temple Mount, in which 20 Arabs were shot to death, seemed a case in point. The report supported the government’s position that Arabs were to blame, acknowledging but playing down indications that police acted without restraint. No Arabs took part in preparing the report.

“The main goal of the investigation was to say, ‘The tribe is all right,’ ” remarked Avishai Margalit, a professor of philosophy.

The impetus to close ranks has given rise to intolerance of dovish dissent. Peace activists are viewed as traitorous, and no anti-Arab rally is complete without shouts of “Death to leftists!” With polls indicating society’s move to the right, there seems to be growing alienation between the general public and those who favor a peaceful compromise with the Palestinians.

After three Israeli residents of the Baka neighborhood of Jerusalem were stabbed to death by an Arab in October, enraged demonstrators first assaulted Arab construction workers stranded in building sites but then turned their wrath on peace activists who live in the district.

“The pressure to close ranks is rising. Attacks on the left are a way of saying the enemies are also within, not just among the Arabs,” Margalit said.

Added Sternhell, who is an expert on fascism: “This is the usual instrument for crippling political discourse. You say the guy who doesn’t think like you is an anti-patriot.”

The assassination and funeral of Rabbi Kahane gave Israelis an opportunity to consider the direction of change. Were the ideas of the fiery rabbi, who preached that Arabs were inferiors who should be expelled from the Holy Land, fringe notions? Or are they the once and future shape of public opinion?

Some commentators warned that Kahane’s ideas are gaining strength in Israeli politics. Columnist Dov Goldstein wrote in the centrist newspaper Maariv that it’s “an open secret . . . (that) in the hearts of many ordinary Israeli citizens hides a not-so-little Kahane.”

Among Palestinians, parallel trends of stiffening intolerance are more brutally evident. For more than 18 months, the toll of Palestinian dead at the hands of other Palestinians has steadily mounted, yet criticism of the phenomenon from within has been muted.

At first, Palestinians excused the killings as part of a need for self-defense. Then the notion of allowable murder spread to include punishment for crimes of vice and finally, in the last few months, to enforce political conformity.

“There is fear, and there seems to be no one to counter it,” said Mahdi Abdul Hadi, a Palestinian political scientist.

On one recent day, three Palestinians were lynched by groups of masked killers on the same day. No Arab leader has spoken against such killings for months, although Husseini, a leading public figure, recently pleaded for the need to maintain the “white” intifada , one based on civil disobedience and limited violence. He rejected calls for a “war of the knives,” although he declared himself unable to curb street attacks by frustrated followers.

Just as “leftists” in Israel are under fire, “moderates” in the Palestinian camp are under pressure from extremists. The houses of Palestinians who have come out in favor of coexistence are daubed with threatening graffiti. Activists who have met in peace debates with Israelis have been warned to stop. Local street gangs have hurled stones at Husseini’s house in defiance of his supposed leadership.

The weak position of the moderates owes partly to their inability to produce results: No peace process is under way that gives hope to Palestinian desires for an independent state.

But chaos within the Palestinian house, in the words of one analyst, also presents severe obstacles to free expression. A battle is under way between the Palestine Liberation Organization and Hamas, a fundamentalist Muslim group, for supremacy in the West Bank and Gaza. The result of the struggle would set the course of Palestinian politics, with the Muslim factions taking the position that the Holy Land is for Muslims only.

“The uprising could become just a series of factional disputes with no room for compromise,” commented Assia Habash, a Palestinian psychologist.

The PLO, rather than trying to carry the fight by emphasizing its public position in favor of compromise, is instead trying to compete with Hamas by promoting a parallel Muslim faction, Islamic Jihad. The group, which was founded several years ago by the PLO--and is not connected to the Shiite Muslim terrorist group in Lebanon--has claimed responsibility for several terrorist and guerrilla assaults on Israeli civilians and soldiers in recent months.

The fundamentalist Muslim position mirrors the stand of nationalist Israeli groups that contend that Palestinians must be displaced from land under Israeli control. The opposing sides are the perfect complement to the developing logic of tribal war.