Israel

Thirty-eight years after debate began over the land captured during the Six-Day War, Israel relinquished some of its bounty in 2005. The architect behind the abrupt about-face: the patron of the settler movement, Prime Minister Ariel Sharon.

In a radical change of course, Mr. Sharon-who once encouraged settlers to "seize every hillside"-authorized a unilateral withdrawal from the Gaza Strip and four settlements in the West Bank. More than 8,000 settlers were evacuated during August and September in a dramatic disengagement that further increased the polarity of Israeli politics.

Although most Israelis supported the plan, not everyone went along. Settlers protested during the months leading up to the withdrawal, and many pleaded with Israeli Security Forces-numbering 55,000-during their exodus from settlement towns. Former Prime Minister Benjamin Netanyahu resigned from his post as minister of finance over the withdrawal, stating that it poses security risks and gives in to the demands of terrorists.

Mr. Sharon further electrified the political climate in November when he quit the right-wing Likud party, which he helped transform into a dominant political force for three decades. Declaring his unwillingness to risk prospects for peace with the likes of Mr. Netanyahu, Mr. Sharon formed his own party, Kadima, or "forward." Several Likud members followed suit, joining his new centrist party and leaving the Likud in a state of disarray and frustration over Mr. Sharon's perceived treachery.

Mr. Sharon announced in December his intention to retain the large string of settlements in the West Bank's Jordan Valley. At the same time he agreed to withdraw from several other isolated enclaves in the West Bank as part of future peace agreements outlined in the U.S.-backed "road map" for peace.

As thousands are evacuated, Israel plans to create new homes in a region virtually untouched. In November, the prime minister unveiled a 17-billion-shekel ($3.6 billion), 10-year development plan for the southern Negev desert region. Mr. Sharon anticipates additional billions in aid from the U.S. government as part of a "disengagement aid package" designated for this development.

Israeli general elections are scheduled for March 28, and recent polls show strong support for the prime minister and his new party even as Mr. Netanyahu looks poised to run the right-wing Likud. But with a notoriously fickle Israeli electorate, and terrorist attacks a continual threat, political forecasters are cautious. In the worst bout of violence since the withdrawal, a December suicide attack by the terrorist group Islamic Jihad killed five Israelis. The nation retaliated with air strikes that killed five Gaza gunmen and threatened to limit trade across Gazan borders.

Balloting for the Palestinian parliament is set for Jan. 25, and Hamas is slated for a strong turnout. Mr. Sharon says he will not negotiate with a Palestinian government that includes Hamas, and as a result, Israel enters the New Year-once again-hopeful but cautious in its quest for peace.