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Last week’s meeting between Israeli Prime Minister Ehud Olmert and Palestinian Authority Chairman Mahmoud Abbas, their first since an informal encounter in June, does not mark the renewal of any serious Israeli-Palestinian peace process. Nevertheless, its importance goes beyond the mere fact that it took place. Potentially, at least, it may signal a joint desire to break the impasse that has characterized Israeli-Palestinian relations since the collapse of peace negotiations more than six years ago.

For Abbas, the decision to expose himself to a widely-publicized embrace by Olmert at a time of heightened intra-Palestinian tensions and while the Palestinian Authority is still under economic siege inevitably provoked criticism by Hamas. But it is consistent with other uncharacteristically forceful actions in recent weeks, particularly his call for early presidential and parliamentary elections. These actions seem designed to exploit Hamas’ declining popularity, which stems mostly from its inability to govern effectively, and to force it, at least in the first instance, to make more concessions in negotiations over the formation of a national unity government. In the broader sense, however, they reflect a desire to push the Palestinian public to make a clear choice between two conflicting world-views: his own preference (shared by much of Fateh and most governments in Sunni Arab countries) for a pragmatic approach to Israel and the world beyond, and Hamas’ alignment with the “resistance” camp championed by Islamist Iran and supported by Syria and Hizbullah. The contrast between these two approaches was neatly symbolized by the activities of Abbas and Hamas Prime Minister Ismail Haniya several days before the Abbas-Olmert meeting: Abbas hosted a visit by British Prime Minister Tony Blair who, along with US Secretary of State Condoleeza Rice, endorsed his call for early elections; Haniya returned to Gaza from a morale-boosting trip to Iran and Sudan.   In the last elections for the Legislative Council, held in January 2006, the choice between these worldviews was obscured by Hamas’ conscious decision to focus on domestic “Development and Reform” – the banner under which it actually campaigned – and Abbas’ meeting with Olmert suggests a conviction on his part that Palestinian interests now require an end to this ambiguity.

For Olmert, the meeting also seems to indicate a determination to move past the indecision that has characterized his own approach to the Palestinians. Unlike Abbas, Olmert faces no immediate domestic challenge; his parliamentary majority is secure and there is no viable contender to replace him. But since his abandonment of the idea of “convergence” following widespread disillusionment with the results of last year’s unilateral disengagement, Olmert has failed to propose an alternative approach. The meeting with Abbas certifies the renunciation of unilateralism and signifies a decision to reactivate the search for a coordinated effort, if not to reach a peace agreement, then at least to stabilize Israeli-Palestinian relations and improve conditions on the ground inside the Palestinian Authority. To build up Abbas as Israel’s partner in this enterprise, Olmert made several gestures, including the release of $100 million in Palestinian taxes collected by Israel but held in escrow since Hamas’ assumption of office and an order to reduce the number of roadblocks and checkpoints impeding free movement within the West Bank.

Like Abbas, Olmert’s immediate focus is the state of bilateral relations but he, too, is not oblivious to the broader strategic context. The summer war with Hizbullah, coupled with heightened attention to Iranian rhetoric and policy (especially Iran’s nuclear ambitions), aggravated concerns in Israel and elsewhere in the region about the threat posed by the Iranian-led axis.  The Palestinian issue figures prominently in this equation, not just because Hamas domination of Palestinian politics would make the Palestinians firmly part of that axis (notwithstanding the fact that their Sunni identity makes them rather “unnatural” partners), but also because high-profile, high-intensity conflict between Israel and the Palestinians complicates any effort to organize more effective cooperation against Iranian-Syrian-Hizbullah objectives throughout the region. That explains why Olmert’s rather modest steps to buttress Abbas are being reinforced by American and British measures (e.g., financial, technical and logistical support for security services presumably answerable to him) and by Egyptian, Jordanian and Saudi exhortations – overt or behind the scenes – to do even more.

Notwithstanding these common interests, however, it is not obvious that whatever momentum may have been generated by the meeting can be accelerated or even sustained. After all, Olmert’s flexibility on other issues is constrained. Despite his agreement to set up a committee to review the issue of prisoners and his government’s approval, in principle, to carry out a limited prisoner release, he cannot move very far in this direction before the abducted Israeli soldier, Gilad Shalit, is freed, and Shalit is being held by Hamas, not by elements loyal to Abbas. Moreover, Olmert’s policy of restraint in the face of ongoing Qassam rocket attacks, which is also assumed to work in Abbas’ favor, is already under very heavy criticism by the public and the security establishment, and it may very crumble after the next Israeli casualties. And even the release of more funds to Abbas before Hamas gives up power or agrees to new elections might backfire, not only because it would make him more vulnerable to accusations of being in the pocket of the Israelis or the Americans, but also, ironically, because it could relieve some the economic hardship that has undermined Hamas’ popularity.

Consequently, this embryonic process may well produce no transformation at all. Abbas’ call for new elections will be extremely difficult if not impossible to implement without the agreement of Hamas. Without that consent, Abbas may revert to indecisiveness, resulting in prolonged stalemate, or slide into a national unity government that facilitates short-term stability but perpetuates the ambiguity surrounding the question of basic Palestinian orientation. Alternatively, Hamas might endorse the holding of elections, contest them, and actually win – a result that would clarify the situation but in ways that would augur badly for the future of both Israeli-Palestinian relations and the contest of world-views in the region as a whole.

For all these reasons, the logic underlying the Olmert-Abbas meeting implies very considerable risks for all concerned. What apparently justifies it for them is the conviction that the risks of inaction are even greater.