fter two years of unprecedented violence, insecurity and an ailing economy, Israelis voted yesterday to keep Prime Minister Ariel Sharon and his Likud Party in power. The strong Likud showing was something of a paradox, considering that opinion polls show that a consistent majority of Israelis favor exactly what Mr. Sharon has not done so far — remove most Jewish settlements from the West Bank and Gaza Strip, establish a clear and defensible national border and help set up a Palestinian state next door. The outcome suggests that in this time of insecurity, Israelis feel safer under Mr. Sharon's hard-line leadership and see no Palestinian partner with whom to negotiate.

Mr. Sharon claims to be ready for what he calls "painful concessions" in the name of peace and has stood up for the principle of a Palestinian state against the mainstream of his party. If he is serious about any of this, the time has come to turn away from his exclusively military response to Palestinian violence. Waiting until terror stops before pursuing peace gives the terrorists the power.

Mr. Sharon's party now holds a strong plurality in the 120-member Parliament, but he cannot govern without building a coalition. Previously he brought the Labor Party in to form a unity government, and he would like to do so again. The idea he sold Labor was that the concessions facing the country were so difficult, it needed a broad coalition to negotiate them. He betrayed this promise by failing to try to advance peace and by encouraging the building of new settlement outposts.

The Labor Party suffered a humiliating defeat yesterday, but the party leader, Amram Mitzna, has vowed not to join a Sharon-led government again. Other Labor leaders may be lured back in an effort to revive their now-sagging party. It may be that building an effective opposition based on the principles of peace and coexistence would better serve Israel in the long term. Mr. Sharon can also turn to the newly powerful Shinui Party, which is anti-religious and ambiguous about peace, or to the religious and far-right parties, which want no part of negotiations with Palestinians. Each combination has its perils.

Palestinians also have a key role here. Locked in their cities yesterday by Israeli troops worried about violence, they wrongly blame their troubles exclusively on Israel. There is no question that Israel's occupation of the West Bank and Gaza has been catastrophic for both peoples. But so has the terror of Palestinian suicide bombers and its acceptance by most Palestinians. Palestinians who wish to advance their own cause should denounce that terror, promote internal democratic reforms and give Israelis more encouragement to take chances for peace. Otherwise the elections will do nothing to mitigate the suffering of either people.