News that Hamas and Fatah are to form a national unity government along with other factions in the Palestinian Authority area of the West Bank and Gaza is significant and welcome.
The impulse to do so is driven by the dire economic straits and poverty suffered by most of the population. Western aid and transfers from the Israeli exchequer were unwisely cut off when the Hamas government was formed in March, following its democratic victory in January elections.
Salaries for 160,000 public workers have not been paid for six months, most families have run up substantial debts and economic activity is "on the verge of collapse", according to a United Nations report.
Three conditions were demanded of Hamas at the time: that it recognise Israel, renounce violence and accept past peace agreements between Israel and the Palestinians. This agreement to form a national unity government addresses these issues obliquely and indirectly but genuinely. The agreement is based on intense talks between Hamas and Fatah prisoners in Israeli jails. The resulting "prisoners' document" first surfaced in June, before the Israel-Lebanon war and the renewed fighting in Gaza. These talks pushed out the political boundaries well beyond those set by the Israeli government's unilateralist policies; this latest agreement confirms that thrust, raising the possibility that regional negotiations, based on a two-state settlement, could be revived.
Hamas is willing to recognise the "existing political reality of the region", including Israel's presence there. Reference is made to a settlement based on the Arab League's formula, agreed in 2002, which would recognise Israel in pre-1967 borders.
A solution to the Palestinian refugee issue is also referred to. Hamas is willing to renounce the use of offensive violence against Israeli targets, but distinguishes this from legitimate resistance to Israeli occupation. It accepts previous agreements with Israel, subject to the large proviso that they "serve Palestinian interests".
It remains to be seen what balance is struck between the parties when a new government is formed and what precise terms of reference apply. But it is the political direction that matters. There is a definite evolution of attitudes on the Palestinian side towards a more comprehensive and accommodatory approach to the conflict. Both sides badly need to revisit it.
Unless they do, the likelihood of another war breaking out is high. Outside powers, as well as regional ones, should do their best to encourage this political evolution by restoring financial aid and political trust to the Palestinian authorities.