FIFTEEN years ago today, the world witnessed an extraordinary event. Yitzhak Rabin, Israel's hero prime minister, shook hands with arch enemy Yasser Arafat, the symbol of Palestinian aspirations. That ceremony marked the signing of the first Israeli-Palestinian peace agreement and launched the Oslo peace process (so named because of the initial involvement of the Norwegian Foreign Ministry).

Fifteen years and thousands of deaths later, it's difficult to remember that Israelis, Palestinians and much of the world thought peace was within grasp.

What went wrong? Israelis thought the agreement would improve their security. But more Israelis died as a result of terrorism during the seven-year Oslo process than in any previous seven-year period.

Israel responded to terrorism threats by imposing closures on the West Bank and Gaza to prevent terrorists from gaining access to Israelis. These closures decreased terrorism, but they also prevented Palestinians who worked in Israel from reaching their jobs. This meant they couldn't earn money, which in turn raised levels of frustration.

When the closures were lifted, Palestinians went back to work, but so did suicide bombers.

Ironically, it was giving Palestinians limited autonomy that created borders within and surrounding the West Bank and Gaza. Checkpoints were placed where Palestinian control ended and Israeli control began.

Although effective at controlling who went in and out and thus preventing terrorism, the long queues, frequent closures and actions of some individual soldiers made the checkpoints objects of Palestinian hatred.

Israeli soldiers hated them, too. Controlling the movement of people going about their business is not something they were proud of. But they also knew that if they didn't do their jobs properly, it might be their friends or family dying in the next suicide bombing.

The Palestinian expectation of Oslo was the end of Israeli control of the West Bank and Gaza. As time went on and the security situation worsened, not only was this goal not realised, the growing number of checkpoints made it appear more distant.

The Oslo accords followed a land-for-peace formula. Israel ceded land to the newly created Palestinian Authority, which was to offer Israelis peace. Security is, always has been and always will be the priority of the Israeli leadership, especially given the history of mass outbreaks of Arab anti-Jewish violence in every decade since 1920.

According to the agreement, Arafat, as Palestinian president, was to enforce law and order in areas under his control. Unfortunately, instead of establishing one police force, he created a dozen. Each of these he kept as rivals to each other, buying loyalty with money, arms and political appointments. He did this to prevent any one person from becoming powerful enough to overthrow his government, which he had seen happen in Egypt, Syria and other Arab countries.

As for implementing Oslo, none of these groups wanted to be accused by its rivals of collaborating with the Jews by preventing terrorism. Instead of helping to prevent attacks against Israel, many of these groups took part in them. A situation quickly developed where those wanting peace with Israel didn't have the weapons to enforce it and those with weapons didn't want peace. This remains the case today.

As terrorism worsened, Arafat implemented a revolving-door policy. He would arrest senior Fatah, Hamas or Islamic Jihad leaders on Israel's wanted list, tell the world he was fulfilling his obligations, then release them days later.

The decentralisation of security control also laid the foundations for the mass corruption that still besets Palestinian society. Without one strong police force, smaller groups could demand protection money from the struggling Palestinian middle class. Their leaders, given senior positions in the public service, used their brief to extend personal fiefdoms.

One of Oslo's key conditions was an end to the vicious anti-Israel incitement prevalent in official Palestinian media. The lack of change in this regard convinced many the Palestinian leadership was never serious about peace.

Since the Palestine Liberation Organisation's inception in 1964, three years before Israel's occupation of the West Bank and Gaza began, its objective was to destroy the Zionist entity and replace it with a Palestinian state. By signing the Oslo accords, Arafat signalled a policy reversal. But this didn't happen. The pro-Israel Palestinian Media Watch, established to examine what the Palestinian leadership said about Israel to Palestinians, raised the alarm.

Conspiracy theories were rife: Israelis were said to have distributed poisoned lollies in front of Palestinian schools, spread HIV-AIDS in Palestinian society and so on. Televised sermons told Palestinians Jews were Allah's enemies. Educational programs prepared Palestinians for a life instead of, not beside, Israel. Most shocking was the indoctrination of children. Instead of teaching ideals of peace, maps in schoolbooks omitted the word Israel. Summer camps for children were frequently named after Palestinian terrorists. Hatred of Jews was encouraged, not rejected.

If Israelis were betrayed by anti-peace Palestinian statements and actions, Palestinians felt betrayed by the increasing number of roadblocks and settlements.

The settlement movement began in the late 1960s, after Israel's offer to return the occupied territories in exchange for peace had been rejected.

Back in Jewish hands for the first time in millenniums, the West Bank is the biblical heartland. From Amos to Zechariah, almost every personality in the Old Testament lived and operated in the area. Often religiously motivated, the settlers established communities near culturally significant sites or on the ruins of Jewish villages destroyed 19 years earlier in the 1948-49 war of independence. Despite finding work in the settlements, Palestinians resented their presence. Adding to this resentment, Israeli security measures, enacted because of Palestinian terrorism, affected all Palestinians.

Military outposts were established adjacent to settlements to protect them from attack and surrounding areas were declared no-go zones for the same reason. With the signing of the Oslo accords, land remaining under Israeli control for security purposes included roads, bases, no-go zones and settlements. This seemed disproportionately favourable to Israel when compared with the number of Palestinian towns.

The actual status of the Israeli settlements wasn't mentioned. The issues of settlements, refugees and Jerusalem were relegated to a final status agreement that was supposed to be signed no later than five years after Oslo. That agreement was never achieved. Fifteen years after the signing of Oslo, the settlements, along with hatred, incitement and terrorism, have all increased. Ineffectual leaders on both sides make the ongoing US-led Annapolis process of negotiations more an exercise in blind hope than peacemaking. But peace is possible and the past 15 years provide lessons on how to approach peace more pragmatically.

Palestinians must become economically independent of Israel. When Palestinian workers can't reach their jobs because of security closures, peaceful relations are threatened. However, the foreign investment needed to make a viable Palestine will eventuate only when corruption is defeated and internal security is achieved.

Some argue this can't happen before an end to Israeli occupation of the territories. However, when Israel withdrew its soldiers and settlements from Gaza in 2005, internal Gazan violence increased, culminating in the Hamas coup in June last year. Moreover, the number of rockets fired from Gaza dramatically increased. Whereas Gaza is relatively isolated, the West Bank abuts Israel's civilian, industrial and commercial centres. West Bank rockets would shut down the Israeli economy, scare away tourists and bring about a huge Israeli military campaign: bad for Palestinians and Israelis alike. Thus, Israel will not make further large-scale withdrawals from the West Bank until Palestinians establish internal control.

Though Palestinians hate the settlements, Israel proved in 2005 it is prepared to remove them. When a final status agreement is signed, Israel will remove any settlements east of the new international border.

A final status agreement will come about only when Palestinians prove able to manage their own affairs. If the past 15 years has seen a failed land-for-peace formula, a more successful approach will be one of peace for land.

Israelis cannot bring peace to the Holy Land by themselves. The international community can help by tying future aid to the end of incitement and corruption. But ultimately it's up to Palestinians to decide if they want to add their name to the roll call of states by putting their house in order.

Bren Carlill is a policy analyst at the Australia/Israel & Jewish Affairs Council.