The celebration of the sixtieth anniversary of the creation of the modern state of Israel this week will symbolise much that is true about that country and the region that surrounds it. It will be an occasion for genuine cheer in Israel itself with the ceremonies witnessed by George W. Bush on his second trip to the Middle East this year, a tour in which he will continue on to Saudi Arabia and Egypt, two crucial allies for America. It will be shunned by the Palestinians, who refer to the events of May 1948 as the Nakba (catastrophe), and ignored by Israel's Arab neighbours.

That, in a nutshell, has been the story of Israel in the past six decades - an astonishing success when viewed in its own terms, combined with the extraordinary failure by all sides to find a political settlement which will allow the Israelis to live in peace consistently. The principal question now is whether the same will be seen come Israel's 70th anniversary in 2018.

Israel's success as a democracy, economy and as a society was far from inevitable. The country was not formed in the most advantageous of circumstances and, when not obliged to exist in the shadow of war or the threat of conflict, it did not do much to help its own cause in its early years by pursuing a pseudo-socialist economic strategy. Triumphs on the battlefield in 1956, 1967 and, after initial reverses, 1973 were not matched by progress elsewhere. As late as the mid-1980s, the nation was racked by hyper-inflation. But since then it has emerged as a cutting-edge, high-tech and broadly free market economy and its society has been renewed by absorbing hundreds of thousands of Russian immigrants. The kibbutz movement carries on, but more out of historical deference than for any other reason. This is a First World country which is looking to live like one.

Whether it can achieve that end is debatable. In the short term, the notion of a grand bargain that brings this bitterest of disputes to a close is scarcely credible. The meetings being held this week could be cruelly dismissed as a lame ducks' circus. Mr Bush will soon end his time in power. Ehud Olmert's popularity ratings have never recovered from his perceived failure against Hezbollah in Lebanon two years ago and he is embroiled in yet another personal scandal involving a police investigation of him (the fifth since he became Prime Minister), this time centring on the allegation that he took cash from a businessman. Mahmoud Abbas, the Palestinian President, has lost control of the Gaza Strip to Hamas and his hold on the West Bank is tenuous. The leaders of Egypt and Saudi Arabia are octogenarians. Syria and Iran remain a menace to peace.

Fatalism, though, is inappropriate. Whatever the rantings that might come out of the presidential office in Tehran, every serious actor in the Middle East recognises that Israel is a settled aspect of the political landscape. The respective fates of Israel, Egypt and Jordan are tied to one another, whatever harsh words might be issued. The Gulf states, not least Saudi Arabia, may see Israel and its prominence as an embarrassment, but they deem Iran to be the real threat to them. Predictions of Islamist fundamentalism sweeping the whole Arabic world are often made, but have not yet manifested themselves in practice. The status quo is essentially one of “no war, no peace”. This is scarcely ideal, but a noticeable improvement on where Israel stood 30 years ago.