"Egyptian military exercises are ominously geared toward an Israeli enemy." That statement was not made by an Israeli intelligence officer with esoteric information, or an Israeli settler desperate to stop the withdrawal from Gaza, but by Tom Lantos, Democratic Congressman from California, during a visit to Israel last week.

Lantos, who is the ranking Democrat on the House International Relations Committee, noted that Egypt, a country under no serious threat from its neighbors, keeps adding weaponry and forces to its already massive army. In particular, it recently supplemented its navy with eleven new battle units.

When you add the fact that previous Egyptian buildups have always led to war against Israel, and that the anti-Semitic demonization of Israel in Egypt's state-controlled media continues without letup, it's not a reassuring picture. Lantos, in reaction, aims to introduce legislation to phase out the annual $1.3 billion in U.S. military aid to Egypt, while converting it to much-needed economic assistance instead.

Considering that Egypt's anti-Semitic incitement has already prompted debates in Congress in recent years about the prudence of enabling its military buildup, it may not be totally Pollyannaish to wish Lantos success. His task won't be made easier, though, by the legitimacy Israeli Prime Minister Sharon keeps bestowing on Egypt by treating it as a wise arbiter that could be trusted to keep Gaza quiet after an Israeli withdrawal.

This week provided more evidence that the whole Israeli-American approach to the Arab-Israeli conflict over the past three decades has been mistaken and destructive. Israel's Central Bureau of Statistics released figures showing that in 2003, immigration to Israel sank even lower. From a robust total of 60,000 in 2000, it fell to 46,000 in 2001, 36,000 in 2002, and just 26,000 last year. The numbers correlate very obviously with the intensified terror war being waged since September 2000.

Here, as in the case of Egypt, what's needed is thinking outside of the box. If one thinks inside the box, one says that the Israeli-Egyptian peace treaty was a great step forward, in which leaders made ringing statements about an end to war and a new era of amity, while ignoring the reality that Egypt is now as belligerent as ever and armed with state-of-the-art US weaponry instead of the old, inferior Soviet weaponry.

Similarly, inside-the-box thinking means saying the "Oslo process" was a wise initiative that saved Israel from the demographic nightmare of ruling over millions of Palestinians - while ignoring the fact that, instead of rescuing Israel demographically, Oslo has made its situation worse. Immigration has always been Israel's lifeblood, but by 2000, Oslo had created a reality in which terrorist enclaves surrounding Israel were busy making it a country that was none too attractive to immigrants. Oslo has also enabled a large-scale influx of Palestinians to within the 1967 borders, substantially increasing the Arab population in Israel proper, which some view as an even more serious demographic problem that could threaten Israel's political viability.

Meanwhile, Israeli forces are much more intensively engaged militarily in Gaza and in West Bank towns like Nablus, Jenin and Tulkarem than they were before the Oslo era began, when Israeli administration of the territories kept terrorism at incomparably lower levels by denying a stronghold to the terror organizations.

Alas, events on the ground keep indicating that minds keep running in the same destructive grooves. Last week, when two residents (including a three-year-old boy) of Sderot, a town in pre-1967 Israel that borders Gaza, were killed by a Kassam rocket fired from the Strip, Israel could at least have turned the tragedy into a propaganda coup. It could have said: "Look, we've stated our plan to evacuate Gaza and are already visibly encouraging settlers to leave, at a price of growing domestic discord. Yet, Gaza terrorists keep firing at Sderot and nearby villages, with no one - not Egypt and not the official Palestinian Authority regime - to stop or discourage them, clearly giving the message that 'occupation of the territories' is not the problem in Arab eyes and never has been."

Yet Israel's official bodies made no such statements, since doing so would have flown in the face of Sharon's new Holy Grail of unilateral withdrawal at any price - eerily reminiscent of the Yitzchak Rabin-Shimon Peres mindset in the early years of Oslo. It was a mindset that said mere infractions like terror attacks and ubiquitous incitement counted for nothing in the great march to peace. Ariel Sharon's disengagement plan is supposed to be less based on trust than the Oslo Accord withdrawals because it's "unilateral." Yet - deja vu again? - Israeli-Palestinian-Egyptian negotiations on the plan, with US involvement, continue full steam, while Sharon disconcertingly shows the same symptoms of treating it as a cause that transcends mere events and evidence.

Israel needs real friends like Tom Lantos who don't admire the Emperor's apparel as he strides along completely in the buff. It's still not too late to look at the facts - Egypt's buildup, the intensification of Gaza terror, the cynical but transparent exploitation of Sharon's plan to strengthen the Arab position - and stop Israel's retreat into a box of low immigration, constant terror, demographic stress and uncertain survival.