However, Steinberg noted that giving Abbas "peanuts without a political process" would incriminate him in Palestinian eyes.

A recent Palestinian public opinion poll showed that Abbas and Prime Minister Ismail Haniyeh would be running neck and neck if presidential elections were held now and that Abbas' Fatah Party has only a small lead over Haniyeh's Islamic Hamas.

Speaking at the Van Leer institute in Jerusalem Thursday, Steinberg highlighted Abbas and Fatah's insistence on a two-state solution to the Israeli-Palestinian dispute. They accept international demands to recognize Israel, honor agreements with it and to renounce violence. That shows the depth of their commitment, Steinberg maintained.

With Hamas it is a different story. In May 2006 security prisoners from all factions drafted a plan for national reconciliation. It became known as the Prisoners' Initiative.

Hamas was unhappy with some elements, and the changes that Abbas and Haniyeh made to it were significant.

The original document signaled acceptance of an all-Arab peace initiative adopted in 2002. According to that plan, all the Arab countries would normalize relations with Israel, and end the conflict, if Israel would withdraw to the pre-1967 war boundaries. The proposal offered an "agreed" solution to the refugee problem that, Steinberg said, means Israel could veto a return of refugees to Israel-proper.

The revised document of June 28 talks of securing "the right of return for refugees to their homes and properties." That, Steinberg noted, means inside Israel that was established in 1948.

Israelis are dead set against such a return because the Arabs would outnumber the Jews and change the state's character.

In September, Abbas and Haniyeh agreed on a platform for a national unity government. Hamas moderated some of its usual stances, but 15 minutes before Abbas boarded a plane to New York to address the United Nations, Haniyeh withdrew his support because the document did not talk of a return of refugees to Israel.

Haniyeh's 'yes then no' attitude exposed his differences with Hamas' political leader, Khaled Mishaal, who is based in Damascus, Steinberg said. Mishaal won.

Deadly battles between Fatah and Hamas have mounted and seven people were killed in Gaza Thursday and Friday.

Steinberg said the differences are not over the need for a national unity government, the need to prevent civil war, lift the economic boycott neither on the Hamas-led government nor over a prisoner swap with Israel. Everybody is united on that but divided over the political price that should be paid for it -- and on whether to recognize Israel.

Hamas does not have much room to maneuver. It belongs to the Muslim Brotherhood. The Palestinian territories are the only place where Muslim Brothers are in power, so whatever Hamas does would affect the Muslim Brotherhood's position elsewhere.

Hamas can agree on temporary cease-fires, but a permanent agreement would violate religious principles, at least the way the Muslim Brothers interpret those principles.

Steinberg said most Palestinians do not subscribe to Hamas' theology so the movement puts forward a pragmatic argument: It does not pay to be pragmatic with Israel. What have the political pragmatists won from Israel? Better be radical and join us, they say.

Hamas leaders maintain the last Lebanon war proved Israel couldn't resolve the dispute with the Palestinians by force. The United States' troubles in Iraq are weakening the Americans and that would affect Israel. On the other hand, Iran, Syria, Hezbollah and Hamas are gaining power, they say.

Hamas believes it could "contain" Abbas and force the international community to lift its economic sanctions without paying a political price for it, Steinberg said.

"If they are only determined, the world will put up with Hamas' dominance," Steinberg said Hamas believes.

Haaretz newspaper's expert on Palestinian affairs, Danny Rubinstein said he had raised those points with Haniyeh, who replied one must distinguish between ideology and practicality. "Nothing can be done on the ideological level but can be done on a day-to- day basis," Haniyeh told him.

There would be no peace and recognition, but there can be a 'hudna'. A hudna is Muslim kind of a cease-fire that would be formally set for 10 years, but two ministers told Rubinstein it would be automatically renewed every 10 years.

The Palestinian government's first decision was to allow contacts with Israel on issues of commerce and agriculture, Rubinstein said.

Steinberg insisted that in such a fundamentalist movement, the Muslim Brothers' only model in the Middle East, there could be no huge gap between ideology and pragmatism.

Hamas' conduct in recent months shows that Haniyeh is prepared to sustain an international boycott, shortages, deterioration towards a civil war but not to accept the Arab peace plan. The Saudi-proposed plan was endorsed by the Beirut Arab summit in 2002, which offered peace and normal relations with Israel if the latter gives up the Arab territories it captured in 1967.

Rubinstein said he had asked Haniyeh: "Are you so strong that you can oppose the entire Arab imitative?"

The Palestinian prime minister dodged the question. "What do you care what happens between me and the Arabs?" he asked.

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