Hamas, the Islamist movement designated a terrorist organisation by the U.S. and EU and considered a mortal enemy by Israel, will soon join the Palestinian legislature. Riding an unprecedented wave of popularity and having exceeded virtually all expectations in recent municipal contests, it could end up sitting at the Palestinian Authority’s (PA) cabinet table. Consequences would likely be far-reaching: Palestinians are hugely dependent on the West and Israel, and both have threatened to cut ties should Hamas join the PA. So far, the U.S. and EU essentially have opted to ignore the Islamists rather than deal with them upfront – the end result being a movement that feels stronger, more emboldened, and over which the West has precious little leverage. With the prospect as remote as ever of a renewed peace process or a weakened PA cracking down on a strengthened Hamas, the international community’s best remaining option is to maximise the Islamist movement’s incentives to move in a political direction through a policy of gradual, conditional engagement.

Hamas’s electoral participation results from a convergence of disparate interests. For President Abbas, securing the ceasefire, rehabilitating the Palestinians’ international standing, and putting the domestic house in order required a deal with Hamas. In exchange for cooperation, he offered power-sharing through political integration. Abbas’s gambit coincided with Hamas’s calculations: it had experienced a surge in popular support during the uprising, was eager for a respite from Israeli military assaults, and, with both Fatah and the PA in disarray, saw an opportunity to translate its success into institutional power. Though originally scheduled for July 2005, parliamentary elections were postponed by Fatah leaders concerned about Hamas’s strength and convinced that with more time they would recover lost ground.

Fatah’s concerns were not misplaced but its response was plainly misguided. Strong half a year ago, Hamas appears far stronger now. In the intervening months, Fatah has continued to fray, consumed by internal divisions, while Hamas has come of age. Municipal elections, in which they handily won control of most urban areas, including traditional Fatah bastions like Nablus, suggest the Islamists are establishing themselves as the alternative of choice to a PA discredited by corruption, chaos and a failure to realise its political agenda. Today, hundreds of thousands of Palestinians live in localities ruled by Hamas.

The record of the last several months, as Hamas rubbed elbows with issues of local governance and campaigned for national office, offers a preliminary, mixed picture of how political integration might affect its outlook and conduct. In its pragmatism, and even willingness to deal with Israel on day-to-day operational affairs, Hamas rule at the local level has been almost boringly similar to its predecessor. Local politicians emphasise themes of good governance, economic development, and personal and social security, leaving specifically religious issues and the conflict with Israel to the background. With only scant exceptions, they have yet to try to impose their vision of an Islamist society.

Nationally, too, signs of pragmatism can be detected. Far more than Fatah, Hamas has proved a disciplined adherent to the ceasefire, and Israeli military officers readily credit this for the sharp decline in violence. In recent statements, Hamas leaders have not ruled out changing their movement’s charter, negotiating with Israel, or accepting a long-term truce on the basis of an Israeli withdrawal to the 1967 lines. Today, their electoral platform is in these respects closer to Fatah’s outlook than to Hamas’s founding principles.

There is a less encouraging side. Hamas continues to straddle its public and clandestine wings, subject to competing views from different leadership elements, and at least partially susceptible to Syrian and Iranian pressures. Most Israelis, and not a few Palestinians, are worried about its armed potential, and there is widespread suspicion in Israel that the organisation simply is biding its time, waiting for the post-electoral period to launch a new wave of attacks with a replenished and improved arsenal. Perhaps most significantly, it has neither renounced violence, nor accepted Israel’s existence.

All this suggests that integration is a work in progress, neither a sure thing nor the safest of bets. But what is the alternative? The PA is not in a military, let alone a political, position forcibly to disarm Hamas. Since taking office, Abbas has been paralysed by a sclerotic political system, and he has more than once staked his political future on successful, inclusive elections. Without the prospect of political incorporation, and in the absence of a credible diplomatic process, Hamas – and, along with it, most other armed organisations – is likely to resume sustained attacks against Israel. What remains, for now, is the possibility that by incorporating Hamas more deeply into local and national governance, its stake in overall stability and the political costs of a breakdown gradually will steer it away from the military path.

Confronted with the challenge of a newly emerging Palestinian reality, the international community has, for the most part, taken a pass. While there are important differences in policy, both the U.S. and EU avoid (and in the American case, bar) contacts with the Islamist organisation, deny funding to projects with Hamas-run municipalities, and have threatened to halt assistance to the PA if Hamas joins it. This attitude has had several, essentially negative, results: estranging Palestinians from Western donors; losing touch with an increasingly large segment of the population; jeopardising project sustainability; and reducing accountability. Meanwhile, Hamas has gained strength from a nationalist backlash against perceived foreign interference and is participating in elections without having to fulfil any prior condition.

Western countries have not done the one thing that might have had a positive impact: try to shape Hamas’s policies by exploiting its clear desire for international recognition and legitimacy. There is every reason for the West to withhold formal dealings at a national level, at least until it renounces attacks against civilians and drops its opposition to a two-state solution, but the current confused approach – boycotting Hamas while facilitating its electoral participation; facilitating its participation without seeking through some engagement reciprocal concessions – makes no sense at all.

Without conferring immediate legitimacy on Hamas, engaging its national officials or removing it from the terrorism list, the EU in particular – which has more flexibility than the U.S. in this regard – should encourage the Islamists to focus on day-to-day matters and facilitate a process of potential political integration and gradual military decommissioning. With Prime Minister Sharon’s sudden incapacitation, an already impossibly perplexing situation has become more confused still. Using Western economic and political leverage to try to stabilise the Palestinian arena would be far from the worst possible investment.

Amman/Brussels, 18 January 2006