In the aftermath of the Camp David summit, that immediate failure wrapped around a glimmer of hope, Israeli Prime Minister Ehud Barak was rightly perceived as a statesman of uncommon courage. It was Mr. Barak, after all, who dared think the unthinkable – that Jerusalem could be divided, its borders redrawn, its holy sites governed to accommodate both Palestinians and Israelis.

The depth of that courage was revealed Monday, when Israel’s parliament, the Knesset, pummeled the would-be peacemaker with double blows of intentional humiliation. First, it with rejected Mr. Barak’s choice for president, the Nobel Peace laureate and former Prime Minister Shimon Peres, in favor of a little-known back-bencher of the right-wing Likud Party. Then it subjected him to two no-confidence votes that failed only by the narrowest possible margins.

Its mischief done, the Knesset now has adjourned until October. That gives the citizens of Israel time to let legislators know whether they want to continue to seek peace and its possible concessions or whether they would reject peace for another 50 years of strife and bloodshed. Just as important, it gives Mr. Barak time to conclude a deal with the Palestinians, and those negotiations are continuing. But he does not have until October, only until Sept. 13. That is the date Palestinian leader Yasser Arafat says he will declare an independent state centered on Jerusalem.

If done with no agreement in place, it is also the date that inevitably will usher in a new era of violence. The courage of Mr. Arafat also must be recognized. Although he left Camp David labeled obstinate and unyielding, he, even more than Mr. Barak, is beset by constituents who see conciliation as cowardice; his willingness to talk and to continue talking exposes him to political and personal peril. The Sept. 13 declaration was made to appease Palestinian hard-liners. It is now a corner into which Mr. Arafat has painted himself.

The task before the United States is to help him find a way out. The initial, frustrated reaction of the State Department and of President Clinton to the collapse at Camp David was to threaten the Palestinians with economic sanctions should they proceed with unilateral independence. That diplomatic misstep must be retraced; it suits the needs too well of the hard-liners Mr. Arafat must keep at bay.

Of more immediate concern is the issue of moving the U.S. embassy from Tel Aviv to Jerusalem. Long a pet project of Congress as a way to back Israel’s claim that the city is its true capital, President Clinton has opposed it as an impediment to negotiations. Now he says he is reconsidering his position. The terrorist group Hezbollah responded by warning that American diplomats staffing such an embassy will return home in coffins.

Retracting that statement, accompanied by a statement from Congress that peace comes before a new embassy, would give Hezbollah reason to crow and it would bruise American prestige. But foreign policy must not be guided by an unwillingness to give terrorists a small public-relations victory and bruises heal. Mr. Barak and Mr. Arafat have a small amount of time to accomplish a great thing. It must not be wasted.