An Israeli-Palestinian peace ... by inches

The words Middle East and hopeless are often spoken together these days. Americans want out of Iraq, Iran appears bent on being a nuclear bully, Lebanon is mired in street standoffs, and the Arab-Israeli conflict feels as if it could go on for another 60 years.

In Gaza and the West Bank, many of the region's inherent woes – violence, nationalism, Sunni versus Shiite rivalry, half-baked democracies, and divisions over Israel – have been on vivid display. A power struggle between Palestinian factions Fatah and Hamas has led to nearly 100 killed in street battles since December.

The nationalist Fatah holds the Palestinian presidency while the Islamic fundamentalist Hamas controls the legislature, and the two can't agree on how to deal with Israel. Last week, after the Saudi king invited the two to Mecca for talks, a tentative peace broke out.

Besides setting a new power-sharing arrangement, the deal for the first time commits the anti-Zionist Hamas to "respect" previous agreements with Israel. That welcome but limited shift in policy demands a positive response from Israel and the United States.

Such an opportunity will come Monday during a trilateral summit. Secretary of State Condoleezza Rice will try to mediate between Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert.

The fact that Saudi Arabia intervened shows how much the Israeli-Palestinian conflict continues to be a pivot for the Middle East's future as well as for the US campaign against Islamic terrorism. The Sunni-based Saudi monarchy could not stand by while its regional rival, Shiite-run Iran, sends money to the Sunni Islamists of Hamas. That would create yet another Iranian surrogate like the Hizbullah terrorists in Lebanon.

Other Sunni-run Arab governments should also be more active in working for a Palestinian state to avoid giving Iran more openings for regional dominance. And a new Palestinian unity government can get the ball rolling by arranging the release of captured Israeli soldier Gilad Shalit.

Israel, too, needs to make more concessions on West Bank settlements and security checkpoints to encourage this trend. Such steps would help the moderate Palestinians make a stronger case that peaceful means, not Hamas-backed attacks on Israeli civilians, will lead to a prosperous, sovereign homeland. Hamas will need to listen to such voices if it expects to win the next election.

Hamas's slight shift toward recognizing Israel, and the Saudi brokered deal that divvies up ministries between Hamas and Fatah, should enable even more international aid to flow to Palestinian civil servants and to humanitarian needs. That would bolster Mr. Abbas's hand in negotiations with Israel.

Those talks need to get to the substantial issues soon. Israel now has a more effective interlocutor in Abbas to reach a deal. The Palestinian chaos in Gaza of recent months should not be an excuse for inaction by Israel. The Middle East will be a safer neighborhood for Israel if a peace pact can be achieved quickly.

Hopes that Hamas will change its stripes will require careful incentives. The Saudis have helped. Now the US and Israel can do something, too.

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