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Uri Hetz has a lot invested in Israel's decades-old presence here in the Golan Heights. He and his partners have invested millions of dollars in Château Golan, an up-and-coming winery with acres of vineyards that sprawl across the southeastern corner of this verdant plateau, stretching right up to the barbed-wire fence that marks the current border with Syria.

In six years of commercial production, Château Golan has emerged from nowhere to win accolades from critics as one of the finest wineries in the region, producing 13 varieties of grapes and 70,000 bottles a year as part of an exploding wine industry across the disputed Golan Heights. A few more years of winemaking, combined with prime growing conditions his grapes enjoy amid the high altitude and volcanic soil, might bring international renown, wine critics say.

Suddenly, though, Château Golan's future is in some doubt. After years of cold silence and indirect hostilities, fresh peace talks between Israel and Syria have been rapidly and unexpectedly making progress in recent weeks. Which means the future of this scenic plateau - where lush vineyards and orchards mingle with minefields and abandoned Syrian villages - could be back on the negotiating table for the first time since the previous round of Israeli-Syrian talks collapsed in 2000.

Mr. Hetz isn't packing up his vats and barrels just yet. Progress until now has been hard to measure, though a continuing series of indirect talks in Istanbul, where Turkish mediators have been shuttling back and forth between Israeli and Syrian delegations staying in separate hotels, suggests that something is happening.

The nascent process got a push yesterday, when Israeli Prime Minister Ehud Olmert and Syrian President Bashar Assad came face to face at a summit of Mediterranean nations in Paris. It was the first time that an Israeli prime minister and a Syrian president were in the same room together, and a chance seating arrangement based on alphabetical order landed the two men in chairs directly across the table from each other.

Mr. Assad had earlier ruled out the idea of shaking hands, and in photographs appeared to be trying his best yesterday to avoid even eye contact with the Israeli leader. But in a television interview broadcast on Al-Jazeera, Mr. Assad said he was ready for "normal relations" with Israel after a peace agreement.

Potentially eliminating one source of friction, Syria also announced yesterday that it would establish full diplomatic relations with Lebanon, a country Syria dominated by force in the past, helping to turn it into a frequent battleground for proxy fights between Tel Aviv and Damascus.

Meanwhile, Israeli officials say Mr. Olmert passed Mr. Assad a message through the Turkish delegation suggesting that it was time for the two men to meet and begin direct negotiations. It all indicates that the two sides might be serious this time about ending the state of warfare that they've been in since the formation of the Jewish state 60 years ago.

Both Mr. Assad and Mr. Olmert know the basic price they'd have to pay to achieve a peace deal. Syria would have to forsake its friendship with the mullahs of Iran and cut its support to anti-Israel groups such as Hezbollah and Hamas. Israel, for its part, would undoubtedly have to withdraw from this scenic plateau it seized 41 years ago during the Six-Day War.

Mr. Hetz, for one, says that's a trade he'd be willing to make. "If it's a good deal, I'm for it. If we return the Golan Heights to Syria and get eternal peace from them, I'm for it," the slim 39-year-old said as he led visitors through a cool underground cellar stuffed with casks of full-bodied merlots and fruity syrahs. "I'm not emotional about these things, I'm rational. This is about the future of the state of Israel. I can make wine and be the best winemaker I can be somewhere else as well."

Mr. Hetz's detached practicality is rare here, however. More common among the region's 20,000 Israeli residents is a defiant refusal to consider the possibility of leaving Golan, which Israel effectively annexed in 1981, a move that has never been recognized by the United Nations. Their intransigence is motivated in equal parts by a deeply held suspicion of Syria's intentions and a belief that the Golan Heights are part of the biblical land of Israel, given by God to the Jews.

"This area is not for sale, not for negotiation," said Marla Van Meter, spokeswoman for the Golan Residents' Committee, a citizens group that helped mobilize public opinion against previous peace talks with Syria in 1991 and 2000. "People have been living on the Golan for 40 years. There are three generations living on the Golan. Our children are having children who live here. We're doing a very good job, thank you very much, of living our lives with this political wrecking ball over our heads."

The 50-year-old Ms. Van Meter, who moved to the Golan with her husband in 1983 and lives on a kibbutz about five kilometres from the current ceasefire line, has an unusually strong connection to the land. Her older brother fought in the Golan Heights in 1973, the last time Israel and Syria directly came to blows. She has a son named Golan and a daughter named Kinneret, the Israeli name for the nearby Sea of Galilee.

Ms. Van Meter said that if the current backchannel negotiations evolve into a new round of direct talks with the Golan Heights on the bargaining table, she'll again help mobilize public opinion against any such deal.

It may not come to that. Most observers, Israeli and Syrian, say that there are simply too many hurdles standing in front of a deal, even if Mr. Olmert and Mr. Assad were able to agree on a formula for the future of the Golan. Mr. Assad bluntly stated this week that he sees little hope for peace talks so long as U.S. President George W. Bush remains in the White House.

If Damascus is going to sever its ties with Tehran, it would expect friendship, trade and financial support from the United States, perhaps something akin to the billions of dollars in annual aid Egypt has received since making peace with Israel in 1979. That seems unlikely under the Bush administration, which has cast Syria as a successor to Iraq in its "axis of evil."

"I don't think this current administration is really interested in supporting serious peace talks between Syria and Israel," said Marwan Kabalan, a political scientist at Damascus University. "The Syrians are waiting until after the U.S. elections [in November] to see what's going to happen."

Mr. Olmert may not have until November. Widely unpopular and facing corruption allegations that Israeli police have said could lead to an indictment, Mr. Olmert is facing a leadership race in September within his own Kadima party that few expect him to win. His opponents say the wily politician is only playing up the possibility of peace with Syria as a way of persuading his dwindling number of political allies to allow him to cling to power a little longer.

Complicating matters still further, Israel's parliament recently passed through its first reading a bill that would make all territorial concessions agreed to by the government - whether in negotiations with Syria or the Palestinian Authority - subject to a popular referendum. Many Israelis spend their summer vacations in the Golan area, and feel a deep emotional attachment to the place.

"The Israeli public is in love with the Golan Heights. As a result, we fell in love with the conflict between Israel and Syria," said Alon Liel, a former director of Israel's Foreign Ministry and a long-time participant in backchannel talks with the Syrians. "You've got the Golan Heights with its strategic and economic value, the good wines and no casualties for 35 years. There are no suffering Syrians, no international condemnation; so why end the conflict?"

The answer is the clout Syria has with two of Israel's other nemeses, Hamas and Hezbollah. Mr. Liel said he believes a majority of Israelis could be persuaded to give up the Golan if it meant an end to Syrian support for the two groups, which themselves have for decades been in an effective state of warfare with the Jewish state.

Of course, progress toward peace talks could easily be derailed by either group, especially Lebanon's Hezbollah, which at the end of the day answers to Tehran, not Damascus. It's easy to picture a scenario in which a Hezbollah attack on Israel - and the predictable Israeli counterstrike - forces Syria to choose between trusting its new friends in Tel Aviv or returning to the comfortable embrace of Iran.

Despite the hurdles to a deal, optimism is rising among some in the Druze Arab minority who live in towns clustered along the Israeli side of the current ceasefire line. Though some of the 18,000 Druze are full Israeli citizens - even serving in the Israeli army, unlike other Arab Israelis - thousands of others have refused Israeli citizenship and carry Syrian passports.

Latent Syrian nationalism was on display this week in the Golan when thousands of Druze took to the streets of Majdal Shams and two neighbouring towns, honking their horns and waving Syria's black-white-and-red flag to celebrate the release of Setan Wali, a local resident who had spent 23 years in Israeli prisons after being convicted of being a Syrian agent. The festivities continued for hours, with the crowd at times holding aloft portraits of Mr. Assad and red banners reading, "Resistance until victory."

Majdal Shams, a hillside cluster of several hundred homes that feels like part of Syria and a world away from Mr. Hetz's elegantly groomed vineyards, has become famous because of its "shouting fence," the spot where relatives in Israel and Syria who have been separated since the 1967 war wave to each other and exchange greetings and family news over megaphones.

The ties remain tight; even those who weren't on the streets celebrating Mr. Wali's release said they were eager to see the Golan returned to Syria, though they understood it might mean a drop in living standards if they were transferred from open and advanced Israel to Mr. Assad's struggling Baathist dictatorship.

"It's not about where life is better. I don't like what goes on over there in Syria, I'm against that government. I'm a democratic person," said Salim Milli, a 39-year-old lawyer. "It's about where our people live, where our relatives are. We're Arabs. We can't change that."

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Conflict timeline

November, 1947 Syria opposes United Nations plan to partition British-ruled Palestine into Jewish and Arab states.

May, 1948 When British mandate ends, Jews proclaim state of Israel. Syrian and other Arab armies invade.

July, 1949 Israel and Syria sign armistice agreement.

June, 1967 Israel attacks Syria, Egypt and Jordan, capturing Syria's Golan Heights.

May, 1974 Syria and Israel sign U.S.-brokered disengagement agreement.

December, 1981 Israel annexes Golan Heights in move unanimously condemned by UN Security Council.

June, 1982 Israel invades Lebanon, crushes Syrian air force intervention, forces Syrian troops and PLO fighters from Beirut.

October, 1991 Israel and Syria attend international Middle East peace conference in Madrid, but fail to agree on peace in exchange for return of occupied Arab land.

September, 1993 Syria refuses to endorse Oslo interim peace accords between Israel and Palestine Liberation Organization.

December, 1999 Israeli prime minister Ehud Barak and Syrian foreign minister Farouq al-Shara meet in Washington.

January, 2000 Israeli-Syrian talks on return of Golan collapse over control of shore of Sea of Galilee. U.S. president Bill Clinton fails to rescue talks when he meets Syrian president Hafez al-Assad in Geneva in March.

June, 2007 Israel, responding to repeated offers of peace talks from Syrian President Bashar Assad, says it's willing to trade land for peace if Syria cuts ties with Iran and anti-Israel guerrilla groups. Syria rejects conditions.

October, 2007 Israel confirms its air force struck Syria on Sept. 6. Washington says target was nuclear reactor Syria was building with North Korean help. Mr. Assad says facility was not nuclear, denies Syria has any covert nuclear arms project.

May, 2008 Israel and Syria announce they are conducting indirect peace talks through Turkish mediation.

July, 2008 Mr. Assad and Israeli Prime Minister Ehud Olmert meet face to face at a summit in Paris to create a new Union for the Mediterranean. Mr. Assad stressed he would not "cede a single inch of territory or make any concession on Syria's sovereignty over the Golan."

Source: Reuters, AFP