Amid talk of wide gaps on key issues, the usually irrepressible Israel prime minister, Ehud Barak, has put the chances of success at no more than 50-50, while one of his colleagues has described the talks as "a leap into the abyss."

The Palestinians, meanwhile, fear a stitch-up in which their leader, Yasser Arafat, will be pressurised into making more concessions than his people will swallow.

On the American side, some suggest, President Clinton’s first objective is to ensure that if the summit fails someone else will get the blame.

But there is more at stake for Clinton than that. Success would redeem his presidency for the history books and give a huge boost to the Democrats in their election campaign.

Clinton’s choice of venue - the presidential country retreat in Maryland - deliberately evokes memories of the Camp David meeting 22 years ago when President Jimmy Carter met Israel's prime minister, Menachem Begin, and the Egyptian president, Anwar al-Sadat. Although the result then was an historic deal, there were times during the 13 days of talks when disaster seemed imminent.

The isolation of Camp David (mobile phones are banned) and the laid-back atmosphere (chess games, bicycle rides and a visit to the Gettysburg battlefield in 1978) are intended to help shift negotiators from entrenched positions. And it can work.

At one point during the 1978 talks, Begin declared: "My right eye will fall out, my right hand will fall off before I ever agree to the dismantling of a single Jewish settlement." But he agreed to it in the end, nevertheless.

The Israeli general, Moshe Dayan, later recalled that the differences at the start were "abundant, wide and basic". All three parties, he said, "had to resolve agonising psychological and ideological crises."

"It meant abandoning long-held traditional viewpoints and outlooks and taking up new positions … There were times when only by clenching teeth and fists could I stop myself from exploding."

Today, both sides will probably start in a similar vein, emphasising that they have little room to manoeuvre.

Mr Barak can point to the fragility of his coalition government; a point graphically - but not altogether unhelpfully - illustrated by his interior minister, Natan Sharansky, and others over the last few days. Barak may also recall how his predecessor returned to Israel 22 years ago with a deal in his pocket, to be greeted by demonstrators waving rolled-up umbrellas and shouting "Chamberlain!".

But Barak’s real position is perhaps more secure than it looks. In the event of a deal he has promised a referendum which would allow the more extreme elements of his coalition no more weight than is their due.

In 1978 Begin adopted a similarly robust position after Camp David, refusing to meet his own party and ignoring the Knesset Foreign Affairs and Defense Committee. After brow-beating his cabinet for seven hours, he swung them round by 11 votes to two, with one abstention. It was a similar story in the Knesset, where a 17-hour debate brought him a massive victory.

Arafat also has a problem with his constituency, though it is less concerned with democratic processes. The Palestinian riots last May were a foretaste of what might happen if he makes too many concessions.

One effect of the Israeli withdrawal from Lebanon has been to raise expectations among the Palestinians - and Arabs generally - of what might be achieved with more effective resistance. People ask: If the Israelis can withdraw completely from Lebanon, why not from occupied Palestine?

A Palestinian referendum would, some argue, protect Arafat against a settlement which created a Palestinian state in little more than name. But with 60% of the Palestinians scattered around the world, the practical difficulties in holding such a referendum would be formidable.

Arafat’s hand is a weak one, though not hopeless. He has threatened to declare a Palestinian state unilaterally if there is no agreement and the Israelis have responded by threatening to annexe parts of the occupied territories. It is debatable which side would suffer most if that happened.

But the continuing Arab boycott is an important factor on Arafat’s side. If there is a fair deal at Camp David, normalisation between Israel and the Arab world - which Israel badly wants - will quickly follow. If not, the Israelis may have a long wait.

Clinton’s negotiating skills - over Israeli settlements, the status of Jerusalem, the refugees and more mundane matters such as water - will inevitably be compared with those of Jimmy Carter, the last Democrat in the White House before him.

Zbigniew Brzezinski, who was Carter's national security adviser, said last week: "Clinton is a very intelligent and able guy, extremely persuasive. But whether he is capable of seriously threatening, I don't know. And that's very important."

Carter certainly threatened both Sadat and Begin. During the 1978 talks he warned Sadat of dire consequences for relations with the US if the Egyptians pulled out, and accused Begin of throwing away a promising peace just to keep "a few illegal settlers on Egyptian land".

Despite his harsh words, Carter was perceived as even-handed. But today Palestinians complain that the Clinton administration has so far put much more pressure on them than on the Israelis. Some even suggest it would be better wait for a change of president.

Clinton’s ability to threaten either side is limited by the fact that he will be out of office in six months and so has little time to carry out any threats.

The 1978 summit dragged on for almost two weeks, but this time it will be shorter: Clinton has said he intends to leave Washington on July 18 or 19 for the G7 meeting in Japan. Brzezinski recalled that little preparatory work had been done for Camp David I. "The differences not only had to be narrowed, but the end game had to be played at the same time," said. This time, the negotiators will move quickly to the end game. "In that sense, it makes it easier,'' Brzezinski said.

This pre-supposes that Clinton’s aides, in their months of preliminary meetings, have judged the Israeli and Palestinian bottom lines correctly and have some solutions to offer. With so much at stake for Clinton, the Americans almost certainly have a workable plan - though there was no sign of that at Clinton’s disastrous summit with the late President Hafez al-Assad of Syria earlier this year.

One approach would be to bridge some of the gaps with dollars. Back in 1978, Menachem Begin was placated by the hope that the Americans would pay the replacement cost of three airfields in Sinai if the Israelis vacated them. This time, they’re talking billions with noughts on.

The Palestinians are said to be seeking $40 billion in aid for the new state, plus tens of billions towards solving the refugee problem. Israel is looking for even more.

One Israeli argument for retaining occupied land - especially in the Jordan valley - is security. American military expertise, and perhaps technology, could be called upon to allay these fears and remove the justification for keeping the land.

But old-fashioned dictionaries - in Hebrew and Arabic as well as English - may also play a part. The original Camp David Accords were deliberately ambiguous in parts, in order to secure agreement. Although only the English version was binding, Begin was given a Hebrew version which obscured some of his concessions.

This time, "sovereignty" and "control" are likely to be key words, especially in connection with Jerusalem and the West Bank. It is likely there will be attempts to resolve some of the intractable territorial issues through leasing arrangements in which one side has sovereignty but the other gains rights of use under clearly-defined conditions.

The 1978 summit was hailed as a success even though it produced a framework for peace, rather than a full agreement. This time, with all sides reluctant to accept a deal which avoids confronting the thorniest and most frequently postponed issues, it looks like all or nothing.

• This is a longer version of an article which appeared in The Guardian on 11 July, 2000