It has been a year since Hamas formed its government – and what a dismal year it has been. The Islamists thought they could govern without paying an ideological price, Fatah that it could swiftly push them aside and regain power. By imposing sanctions and boycotting the government, the Quartet (U.S., European Union (EU), Russia and UN) and Israel hoped to force Hamas to change or persuade the Palestinians to oust it. Washington promised security and economic aid to encourage Fatah to confront Hamas and help defeat it. The illusions have brought only grief. The 8 February 2007 Saudi-brokered Mecca Agreement between the Palestinian rivals offers the chance of a fresh start: for Hamas and Fatah to restore law and order and rein in militias; for Israelis and Palestinians to establish a comprehensive ceasefire and start a credible peace process; and for the Quartet (or at least those of its members inclined to do so) to adopt a more pragmatic attitude that judges a government of national unity by deeds, not rhetoric. The adjustment will not be comfortable for anyone. But the alternative is much worse.

That Palestinians have wasted the past twelve months is difficult to contest. Treated as an international outcast and an intruder by much of the Fatah-aligned civil service and security forces, Hamas has been unable to govern. It has survived, and under these conditions survival is an impressive achievement. But it arguably is the only one. Fatah, obsessed with recovering power, has done virtually nothing to restore popular credibility and reform itself. Its periodic threats to call early elections or a referendum to unseat the Islamists exacerbated tensions without offering a way out of the stalemate. Palestinian Authority (PA) institutions are collapsing, law and order vanishing; relations between Hamas and Fatah deteriorated to near civil war.

Israel and the Quartet also squandered the year. Sanctions did not achieve their objectives. The EU – justifiably reluctant to starve the Palestinian people – pumped more money into the PA but more ineffectively and less transparently. Years of investment in now decrepit Palestinian institutions have gone down the drain. Western commitment to democracy in the Middle East has been roundly discredited. Hamas, weakened but still strong, is not going away. Diplomacy has been non-existent, violence between Israelis and Palestinians continues, and there has been no movement on prisoner exchanges. By almost every conceivable standard – governance, security, economics, institution-building and the peace process – there has been only regression.

The Mecca Agreement and the prospect it offers for a national unity government represent a chance to arrest the catastrophic slide toward civil war. The accord reflects basic conclusions reached by Hamas and Fatah: that neither can defeat the other; the public was turning against both; and continued strife could rapidly spin out of control. The opportunity is fragile: the two movements will have to show far more political flexibility and humility than either has evinced to date; tackle issues (Hamas’s integration into the Palestine Liberation Organisation (PLO) and the militias’ integration into the security services) the accord barely mentions; and find ways to suppress deep resentment and a thirst for revenge experienced by many families and clans throughout the occupied territories.

International responsibility is equally heavy. The Quartet’s first reaction has been cautious. The agreement does not embrace the three Quartet conditions for resumption of aid and diplomatic contact: the new government will “respect” past Israeli-Palestinian accords, not abide by them; it will not recognise Israel; and it has not renounced violence – yet another reminder of how little a year of pressure and sanctions has extracted from Hamas. But what really matters is whether it will agree to and impose a mutual cease-fire; deal with Israel on day-to-day matters; acquiesce in negotiations between President Abbas, as leader of the PLO, and Israel; and, if a permanent status agreement were reached, allow it to be put to a popular referendum and pledge to honour its results.

Those standards should now apply to a government of national unity. The political and economic boycott should immediately be eased to allow discussions with the government as a whole and give Hamas an incentive to further moderate its stance; over time – based on PA performance, including release of Corporal Shalit in a prisoner exchange and adherence to a ceasefire – sanctions should be lifted in a calibrated manner. This is a course the U.S., politically and legally hamstrung, is unlikely to take. But it is one that Arab states and other Quartet members, principally the EU, should embrace. Maintaining sanctions and shunning a government expected to comprise some of the most pragmatic Palestinians would not bring the international community any closer to its goals. It would strengthen hardliners in Hamas, discredit Fatah further and risk provoking greater Israeli-Palestinian violence.

The main objective, of course, is to revive the peace process and move toward a two-state solution. Critics of the Mecca Agreement and the national unity government, chiefly the U.S. and Israel, call it an impediment to progress – an odd characterisation considering there was no peace process before Hamas won the elections and no peace process before Fatah agreed to join its government. It is also wrong. Mecca is a prerequisite for a peace process not an obstacle to it. Without a Hamas-Fatah power-sharing agreement and as long as the Islamists feel marginalised, unable to govern and in an existential struggle for survival, there can be no sustainable diplomacy. With sizeable public support, Hamas can deny Abbas the legitimacy required to make difficult concessions. It can launch attacks on Israel to torpedo talks. And in or out of office it can easily prevent a referendum designed to ratify any potential agreement.

If the international community is serious about its proclaimed goals, it will help bring stability to the Palestinians and broker a comprehensive Israeli-Palestinian ceasefire, permit the unity government to govern and press for meaningful negotiations between Abbas and Olmert. It will see Mecca as an opportunity to revive the peace process, rather than as yet another excuse to bury it.

Amman/Jerusalem/Brussels, 28 February 2007