The contention that the expansion of Israeli settlements in the occupied territories and Israeli-Palestinian peace are not incompatible is one of the principal assumptions upon which Arab-Israeli diplomacy during the past decade has been built. From the earliest days of the Madrid process, U.S. diplomacy has accommodated an Israeli refusal to endorse a halt to settlement growth and to defer Palestinian demands for a “settlement freeze.” Only when Yasser Arafat conceded on this issue in 1993 was the stalemate broken that had attended the Madrid-mandated talks and the road opened to the historic Declaration of Principles at Oslo.