Israel has come a long way since its creation 60 turbulent years ago, but it remains mired in a seemingly intractable conflict with Palestinians who are still struggling to have their own state.

As Israel prepares to host foreign dignitaries including US President George W. Bush for a days-long birthday bash, Palestinians are commemorating six decades of what they call the "Naqba" - Arabic for catastrophe or disaster.

The term refers to the shock defeat of the five Arab armies that invaded immediately after Israel was established by the United Nations in May 1948, and to the creation of some 700, 000 Palestinian refugees - an event at the core of the Middle East conflict.

The occupation, as it is now known, began when Israel seized the West Bank, Gaza Strip, Golan Heights, east Jerusalem and the Sinai Peninsula in 1967, etching the main fault lines of the modern conflict.

Although it has fought seven wars against its neighbours and battled Palestinian armed groups the world over, Israel has made major strides since its establishment in the aftermath of the Nazi Holocaust.

Six decades after its creation on 14 May - or 8 May according to the Hebrew lunar calendar - Israel enjoys a stable economy on a par with most Western countries, a powerful military, a booming high-tech sector and what is thought to be the region's sole if undisclosed nuclear arsenal.

"This country has managed to confront a succession of unique challenges," says political analyst Eytan Gilboa of Tel Aviv's Bar Ilan University.

But peace, perhaps the greatest challenge of all, remains elusive.

Israel did sign peace accords with Egypt in 1979 and Jordan in 1994, but it remains at odds with neighbouring Syria and Lebanon, and Iran's President Mahmud Ahmadinejad has openly called for its elimination.

"Iran and the nuclear issue have brought back the existential threat against Israel that existed before the 1967 Six-day war or the Yom Kippur war of 1973," says defence expert Efraim Kam.

The feeling of insecurity is strong among Israelis.

An opinion poll published in April by the Haaretz daily showed 34 percent of Israelis feared Iran would acquire a nuclear weapon and 21 percent believed there could be war with Lebanon. Only four percent said they were not afraid.

When Israel celebrated its 50th anniversary in 1998 optimism was running high that it may finally resolve its dispute with the Palestinians, the open wound that has poisoned relations with most of its neighbours.

Israel's Prime Minister Yitzak Rabin, of Six-day war fame, had launched the Oslo Peace Process with Yasser Arafat, founder of the Palestinian struggle.

Rabin won a Nobel peace price, as did Arafat, for efforts to end the bitter conflict that drew condemnation from right-wing Israeli politicians at home.

A Jewish extremist shot Rabin dead at a peace rally in Tel Aviv in November 1995, and five years later fighting between Israel and the Palestinians erupted once again.

Since then more than 6300 people have been killed, the Palestinians have split into rival entities, and Israel has battled to a bloody stalemate with both the Lebanese Hezbollah militia and the Islamist Hamas movement in Gaza.

Peace talks with the Palestinians were revived once again at a US-backed conference last November but have made little progress since then, and to this day Israel's borders are not universally recognised.

For the Palestinians, 60 years of struggle have produced only bitterness.

"Every year from my house I see their independence celebration and their fireworks," Jamal al-Rumi grumbles, pointing to an Israeli settlement visible from his home in the Al-Amari refugee camp in the West Bank.

"And every time it reminds me of my parents who had to leave Lod in 1947," says Rumi, a 51-year-old Arabic teacher counted among the 4.4 million Palestinians the United Nations considers to be refugees.

The occupied West Bank is a patchwork of Palestinian communities and Israeli settlements, where movement is restricted by the Israeli separation barrier and hundreds of military roadblocks.

Since June last year, secular Palestinian president Mahmud Abbas has held sway in the West Bank only after Hamas Islamists ousted his forces from Gaza, which is now under a blockade Israel says is aimed at halting rocket attacks.

"Palestinians are in a political impasse. Gaza and the West Bank are divided, negotiations are deadlocked, the construction of the wall continues, Gaza is besieged," says Amer Assaf, an organiser of Nakba commemorations in Ramallah, the West Bank's main city.

Even many Israelis believe the continuing occupation of Arab land undermines the Jewish state and could be the trigger for yet more regional firestorms.

"I inherited a miraculous state from my parents. I leave to my children a question mark," sums up Akiba Eldar, an expert on Israel.

AFP