JERUSALEM - The fate of the Israeli-Palestinian conflict has become a collection of moving parts that somehow need to come together in a single package: an Israel-Hamas prisoner swap, a truce for Gaza, and new governments on both sides of the firing line that could pursue peace.
Prospects for success decreased significantly on Monday, when Egyptian-mediated talks for a prisoner swap — exchanging a captured Israeli soldier for hundreds of jailed Palestinian militants — ended without agreement, according to Israeli officials, dashing hopes that a deal was close.
Such a swap could have helped pave the way for a longterm Israel-Hamas truce deal that in turn might have opened the Gaza Strip's blockaded borders to allow for reconstruction after Israel's punishing offensive there.
Rebuilding Gaza will almost surely also depend on the success of current reconciliation talks in Egypt between Hamas militants and the Western-backed Fatah movement in efforts to reverse the results of a brief 2007 civil war that left rival Palestinian governments in Gaza and the West Bank.
Getting Hamas and Fatah to reconcile is also key to the success of U.S.-backed Mideast peace talks, as it's unlikely Israel would sign on to a deal if moderates are in control of just the West Bank while militants rule Gaza. The latest news from Egypt is that the Hamas-Fatah talks are not going well.
The biggest question now is whether Israel would sign a deal under any circumstances. Prime Minister-designate Benjamin Netanyahu, a political hawk, early Monday initialed a coalition agreement with the ultranationalist Yisrael Beitenu Party — increasing the likelihood that Israel's next government will spurn peace talks.
The bottom line is that the obstacles to Palestinian unity, open borders for Gaza and a peace deal that would usher in Palestinian statehood seem as formidable as ever.
Contacts in Cairo between Israel and Hamas for a prisoner swap have ended without agreement after Hamas hardened its position and retracted earlier understandings, the Israeli government said in a statement late Monday.
The statement came after two high-level Israeli negotiators returned home after two days of intensive talks in Cairo.
The statement said that "during the negotiations, Hamas hardened its positions, retracted understandings reached during the last year and raised extreme demands, despite generous Israeli offers."
Winning the release of Gilad Schalit, a 22-year-old Israeli sergeant captured by Hamas-allied militants in June 2006, would have given Olmert a key diplomatic victory in his final days as prime minister. The kidnapping took place shortly after Olmert took office and has clouded his tenure.
Hamas has demanded the release of hundreds of Palestinian prisoners, including dozens convicted of killing Israelis.
Hamas officials were not available for comment late Monday. Some Mideast watchers had predicted the group would be eager to reach a deal before Netanyahu takes office. The Israeli politician is putting together what is shaping up to be a right-wing coalition that will almost surely be less accommodating to Hamas demands — even though a broad-based Israeli unity government including centrists is also still possible.
A prisoner swap could have strengthened Hamas by creating the impression that militants and their violent acts are the best way to get Israel to budge. However, a swap could also help boost Fatah by securing the release of that group's most popular politician, Marwan Barghouti.
For Hamas, a prisoner swap would also be an important step toward ending Israel's crushing economic blockade of Gaza. Following a bloody Israeli military offensive in Gaza earlier this year, Hamas is desperate to reopen the area's borders to allow in reconstruction supplies. Israel says it won't enter a longterm truce deal easing the sanctions until Schalit comes home.
Even if a prisoner swap could somehow be salvaged and lead to a permanent truce deal for Gaza, it's unlikely all the money and materials needed to rebuild the territory could come in unless Fatah regains a foothold there. That's because international donors are loath to send money to a militant regime and because Israel suspects reconstruction materials could be used for warfare.
Fatah and Hamas factions meeting in Cairo agreed over the weekend that Palestinian elections should be held in the West Bank and Gaza by next January. But that appeared to be their only agreement amid many disputes — including whether Hamas could accept the key demands that it renounce violence and honor past peace accords with Israel.
If Hamas sticks by its refusal to recognize the Jewish state, as seems likely, a new right-wing Israeli government could use that as an excuse to shun a future Palestinian unity government, and perhaps even intensify the blockade of Gaza.