In a pretty amazing news conference that I believe is still ongoing as I write (BBC World News cut short their coverage after the first questions began), representatives of the two major Palestinian factions, Fatah and Hamas, announced results of meetings in Cairo. Basically, the two sides agreed to agree on a national unity government, turning "dark Page" in Palestinians' history: the civil war that split off Gaza and the West Bank.
More concretely, the two factions agreed to set up five committees, some of which were described in the announcement -- a committee to work on the national unity gov't., another to set a date for new national elections which will include a new Presidential vote, and a committee to unify security services.
A unity government in Palestine has to be seen as a step forward in numerous ways. Foremost on the minds of reporters was the rebuilding of Gaza -- and who would be responsible for that. This comes on the heels of an announcement, by the West Bank Fatah Gov't. Prime Minister Salam Fayyad, of a plan to ask foreign governments for $1.33 billion to rebuild Gaza, and another $1.45 billion to support the Palestinian government. Fatah and Western governments want to avoid a situation like the one that developed after the 2006 war in Lebanon, where Hezbollah built up much popular appeal and political capital by distributing large amounts of cash supplied by Iran, to help the residents rebuild.
A unity government could provide much needed relief for Palestinians who have suffered under the international embargo of the Hamas gov't. in Gaza, particularly if national elections yield a result that is more appealing to foreign governments. If Hamas actually gains in the election, there's no way to predict how this will play out. However, if Hamas shows a willingness to renounce violence and talk with Israel (seems like a fantasy, but...), or at least call a real time out to allow for talks, there could be a different dynamic. If Fatah aligns in support of the government, even if they are second fiddle, they could change this dynamic.
One other interesting development is the agreement to revive the Palestine Liberation Organization. I'm not sure what the significance of this may be, but it was something they made a point of announcing.
A big question will be how Israel responds. It seems certain that there will be little progress toward a peace deal, while Bibi Netanyahu is in charge. The question, then, is whether he will rule with a narrow right-wing government, or accede to the request by Kadima's leader, Tzipi Livni, to set up a national unity government of their own, with rotating prime ministers. If Livni can take the reins of government in 2 years, especially a national unity government, there might be the opportunity to move the Israelis and Palestinians toward their own agreement.
A national unity government in the Palestinian territories makes it far less likely that there will be the kind of provocation that will lead to another Israeli incursion. It also makes it far less likely that Israel will take the kind of provocative actions that have previously been invoked by Palestinian extremists to justify attacks on Israeli civilians.
Currently, Israeli PM Ehud Olmert is considering a cease-fire agreement that would give Israel the return of captured soldier Gilad Shalit. In exchange, the Israelis would be asked to release hundreds or even thousands of Hamas Prisoners. This might seem a bit unbalanced, but Israel has always made deals of this kind, because of its commitment to each soldier and their families. (I've found a certain connection of my own to this case, as I was friendly with a Gilad Shalit growing up in New York -- as it happens an unrelated person with the same name). As part of this release, Olmert might take the opportunity to release former Fatah leader Marwan Barghouti, who may be the only Palestinian with the credibility needed to make a deal with the Israelis.
Of course, this being the Middle East, even the best-intentioned, optimistic plans are likely to be shattered by the machinations of extremists on both sides. However, for today, this represents movement in the right direction. The first such movement in a long time.