SHARM EL-SHEIKH: A mural of past Israeli and Palestinian leaders in the Egyptian resort of Sharm el-Sheikh is a reminder of failed peace deals - and a salutary warning against premature optimism.

While Tuesday's Israeli-Palestinian truce agreed at the Red Sea resort may outlive initial celebrations, it is far from resolving differences that have led to decades of deadlock and bloodshed.

"It is going way overboard to say that this is a new beginning," said Mouin Rabbani, Jordan-based analyst of the International Crisis Group think tank.

Brought together by Arab leaders and encouraged by the White House, Israeli Prime Minister Ariel Sharon and Palestinian President Mahmoud Abbas called their ceasefire the best hope of reviving a US-led "roadmap" to coexistence.

Both sides will welcome calm after four years of suicide bombings, assassinations, tank raids and rocket attacks. Hundreds of Palestinian prisoners will be freed and a troop pullback in the West Bank should help the Palestinian economy.

Seizing on a chance for peace after Yasser Arafat's death, the United States is willing to step up assistance.

The Sharm summit also agreed that Sharon's plan to evacuate Jewish settlers from the occupied Gaza Strip this summer could kick-start the roadmap process if done in coordination with the Palestinians. But with Israel intent on keeping much of the West Bank and core political disputes untouched, few expect to see a permanent peace deal any time soon.

Islamic militants informally observing calm said they were not bound by a cease-fire Abbas announced without their blessing, while Jewish settlers in Gaza vowed anew to stay put in land they see as a biblical birthright.

"There are a considerable number of people who are ready to swear that hair will grow on the palms of their hands before two states living side by side in peace will result from all this talk," said analyst Yoel Marcus of the Israeli daily Haaretz. Even the initial steps are far from certain.

Abbas still has to win a formal truce from militants who seek to eliminate Israel and replace it with an Islamic state, rather than living alongside. Israelis remain doubtful he could bring them into line without using force, but to do so might threaten his internal grip.

Some Palestinian officials join Israelis in suspecting that Lebanese Hezbollah guerrillas could try to encourage militant attacks to ruin peace moves.

Internal divisions also dog the Israelis. Sharon is still battling critics of his Gaza pullout plan, including calls for a referendum from within his own Likud party which traditionally opposed relinquishing land.

"We face a serious internal struggle," said Foreign Minister Silvan Shalom, breaking with Sharon to urge a popular ballot.

Israeli polls show a majority for quitting Gaza, but some Israelis fear bloody confrontations that may make it harder for any future government to consider giving up more West Bank settlements even if the will was there.

FINAL AGREEMENT: Despite the smiles in Sharm el-Sheikh, Palestinians question Sharon's commitment to a viable two-state solution and fear he will not go beyond a Gaza withdrawal that was initially flagged as a unilateral plan to "disengage" from conflict.