By Joe Klein
December 4, 2014

The Vandals started the fire in the first-grade classroom with a pile of textbooks. But textbooks apparently don’t burn so well. The classroom was destroyed, and the one next to it damaged, but that was all. It was a Saturday evening. The janitor called the principal, Nadia Kinani, to report the fire, and she rushed to the school. She saw that it wasn’t only a fire. There was graffiti that turned her stomach. First she saw kahane was right, a reference to Meir Kahane, a deceased Jewish extremist leader. And then she saw no coexistence with Cancer. And death to Arabs. Kinani is an Arab, and her school is the rarest of things–a bilingual academy whose students are nearly 50% Jewish and 50% Arab, in the heart of Jerusalem. “My first thought was, Our dream is finished,” she told me three days after the fire. “No parents will want to send their children here anymore.”

The hand in hand school in Jerusalem–one of five such–opened in 1998, after several years of careful preparation. It was a moment of hope. The Oslo accords had been signed by Yasser Arafat and Yitzhak Rabin; peace was surely on the way. “I believed that if you want to solve any problem, the way to begin is through education,” says Hattam Mattar, an Israeli Arab who sent his daughters to the school. “Some of my friends said, ‘Your daughter will marry some Jew guy.’ But I figured my daughters could meet Jew guys on the bus. I thought that this school would give them a stronger sense of their own identity and who we are living with.”

The school is totally bilingual. There are two teachers per classroom. All holidays are celebrated–or at least noted and discussed, as in the case of Nakba Day, the Palestinian remembrance of those forcibly removed from the land during the 1948 war. In fact, everything–every riot and bombing and “protective” wall–is discussed by parents and children alike. There is no political consensus about one state or two states, just a feeling. “We are all here,” Kinani told me. “We have to figure out a way to live together.”

The school was built next to a railroad track and is close to the original 1948 border between Israel and Jordan. It was built in an Israeli neighborhood but is adjacent to an Arab area. “They say we live in a bubble, but it is more like a cauldron,” said Rebecca Bardach, the school’s director of resource development and strategy, as she led me to a terrace that overlooked a wadi. On the other side of the valley was the arena where the Beitar Jerusalem soccer team plays. The Beitar fans are notorious; one of their favorite chants is “Death to Arabs.”

There was a time–during most of Israeli history, in fact–when such sentiments were considered way out of the mainstream, unacceptable in polite society. But that is changing. There is rising tension in Jerusalem, with near daily acts of terrorism and humiliation by both sides. Last summer, three Israeli children were kidnapped and killed by Palestinians on the West Bank; some Jews responded by killing a Palestinian child. Israeli Prime Minister Benjamin Netanyahu reacted with emotional disgust to the vengeance killing, but his government has been promoting an entirely unnecessary, and quite possibly meaningless, law that would make Israel a Jewish state. And so you have a steady bloody dribble of horror in the streets. Palestinians murder four rabbis in a synagogue. Israeli thugs torch the Hand in Hand school.

Gradually, the Oslo dream of two states, Israel and Palestine, living peacefully side by side begins to seem unlikely. There are all sorts of sane arguments for a two-state solution. The West Bank occupation has smashed Israel’s moral compass, and Israel’s democracy will be destroyed as the West Bank Palestinian population increases and is refused the right to vote. But in the Promised Land, fantasies have always trumped reality. There is the fantasy now of a Greater Israel; there is the fantasy of no Israel at all. These views are held by minorities with the dead-eyed arrogance of majorities.

Almost immediately, on the night of the fire, the parents went to the Hand in Hand school. At first, Kinani’s fears seemed justified. A parent told her she was withdrawing her child. But there was a discussion in the library that night, a classic Hand in Hand discussion, with Arab and Jewish parents sharing their anger and fears. The parent changed her mind. “There is no place else I would want my child to be,” she said. A student at the meeting asked if there would be school on Monday. “Yes,” Kinani responded, “and there will be homework.” And on Monday, the students responded with graffiti of their own. We are not enemies, said one sign. And another: We continue together without hatred and without fear.

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This appears in the December 15, 2014 issue of TIME.

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