GAZA CITY, Gaza Strip - From the Gaza neighborhoods where Hamas radicals now collect money for utilities and mete out justice, President Bush's goal of forging an Israeli-Palestinian peace deal within five months is looking increasingly unattainable.
Every effort to drive the Islamic militia from power has failed, and the group now appears more entrenched than ever in Gaza, one of two territories Palestinians claim for their would-be state.
Peace negotiators representing Israel and the West Bank's moderate Palestinian leadership privately report progress in their efforts to outline future borders. But the talks are taking place in a vacuum, and haven't been accompanied by serious goodwill gestures that could help them succeed.
And Israel's corruption-tainted prime minister, who launched the talks together with the Palestinian president, has said he would step down after his party elects a new leader next month.
Visiting the region earlier this week, Secretary of State Condoleezza Rice said she believes success is still possible, "God willing." But these days it's hard to find anyone else optimistic about the deal's January 2009 target date, announced with great fanfare at a U.S.-hosted Mideast peace conference nine months ago.
In a sign of diminished hope, Rice's latest visit received little media attention in Israel, easily eclipsed by the story of a missing French girl. Ordinary Palestinians and Israelis are increasingly fatigued over their long conflict and the fruitless attempts to solve it.
Of all the obstacles to peace, perhaps none is more formidable than Hamas' violent takeover of the Gaza Strip 14 months ago. The moderate Palestinians holding talks with Israel control only the West Bank, but say their future state must include both the West Bank and Gaza, two separate land masses located on opposite sides of Israel.
Israeli officials say even if the peace talks bear fruit, the result will be a mere "shelf agreement" - to be taken off the shelf only after Hamas' rivals in the secular Fatah movement, led by Palestinian President Mahmoud Abbas, retake Gaza.
Regional players have begun to rethink their strategies because Hamas doesn't appear to be going anywhere any time soon.
Egypt has brokered a cease-fire between Hamas and Israel. Abbas has proposed setting up a government of technocrats in Gaza and stationing peacekeepers from Arab countries there. As part of a prisoner exchange deal with the militants, Israel is expected to yield to Hamas' demands to release Palestinian prisoners who killed Israelis. Jordan has begun rebuilding its relationship with Hamas after years of discord.
Gaza, home to 1.5 million mostly impoverished Palestinians who are not free to come and go, is posing sharp dilemmas to Israel and the West.
As part of its two-month-old truce agreement with Hamas, Israel has begun to ease the blockade of Gaza it imposed after the militants took over, each day allowing in some 90 supply trucks carrying food, medicine, school supplies, cement, gravel and, most recently, candy and other sweets for the Muslim holy month of Ramadan, said Israeli military spokesman Peter Lerner.
Israel is loosening the squeeze at a snail's pace, however, because it doesn't want to forfeit its leverage over Hamas as it attempts to secure the release of an Israeli soldier captured by Hamas-linked militants in 2006. Israel also feels that easing the blockade could further entrench the militants in power and reduce their incentive to allow Abbas' forces back into Gaza.
On the other hand, maintaining or intensifying the blockade would increase the desperation of Gaza's people and likely lead to more deadly fighting with Israel - a scenario that in the past has undermined the peace efforts of Palestinian moderates.
Fourteen months of punishing sanctions have accomplished little else than to amplify misery. The private sector has been decimated, with almost all factories shut down. Reduced fuel supplies and lack of spare parts have badly damaged waste collection, sewage treatment and the operation of hospitals. Some 80 percent of Gaza's people now rely on U.N. food handouts just to survive.
At the same time, Hamas' grip on life in Gaza has deepened, with many blaming Israel and the West, not the Islamic radicals, for their plight.
If you don't pay your gas or electricity bills in Gaza these days, Hamas cuts it off. Crime is down, but human rights violations are up. Motorists have to pay to register their vehicles, and Hamas-run courts appear to be better run than their predecessors under Fatah.
A 44-year-old man named Shawki recently stood outside a court building in Gaza and said he has been trying unsuccessfully for years to obtain a just ruling on a land dispute.
"Today I will get my rights," he said. "They (Hamas) have real courts and real police."
As both Hamas' rule and its split with Fatah intensify, Egypt has begun meeting with various Palestinian factions in an effort to end the internal Palestinian divide that is seen as a major impediment to statehood.
Still, the Fatah-dominated Palestine Liberation Organization has come up with a contingency plan if Fatah and Hamas fail to reconcile. According to PLO officials, the organization is considering declaring Gaza a rebel territory under the control of illegal militias - a designation that would set the stage for the West Bank government to stop facilitating the arrival of food, electricity, water, medical supplies, currency and other materials into Gaza.
Hamas rule in Gaza isn't the only major obstacle to Mideast peace.
Israeli Prime Minister Ehud Olmert's decision to resign amid a series of corruption probes raises a very big and unanswered question of whether his replacement will also pursue peace.
There's a growing sense among Israelis that their 41-year occupation of Arab lands captured in the 1967 Mideast war is not sustainable in the long run. Olmert has been seeking to unload those territories through peace talks with Abbas - including a meeting between the two leaders scheduled for this Sunday.
But he has failed to halt settlement activity and ease onerous travel restrictions, measures that could show Palestinians that they have more to gain through diplomacy than violence.
Abbas also has a long way to go before fulfilling his end of the bargain. Israel believes he has not yet reined in the extremists who, if left unchecked, could overrun the West Bank as they did Gaza after Israel withdrew its settlers and troops from that territory in 2005.