In two months after Mubarak’s departure, Fatah and Hamas achieved reconciliation which eluded them for the last five years. The agreement came as a surprise for Israeli government.
Fatah lost everything: a chance to get the EU recognize its statehood in a few months, the West’s support for its statehood declaration at UNGA, and its political power itself. In the next elections, Hamas will defeat Fatah in Gaza, elections rigged or otherwise, and with substantial support in the West Bank will gain majority in Palestinian parliament. Hamas can oust Fatah even sooner by staging riots in the West Bank, which it can now do freely since its local organizations became legal.
The obscene Israeli government will continue tax transfers to Fatah-Hamas government because that is what is was doing before: Israeli tax transfers went to Fatah government to be passed to Hamas employees and militias in Gaza. The White House, no more a Jew-lover than our own government, will continue massive aid to Fatah-Hamas government.
Fatah accepted Hamas demand to stop peace negotiations with Israel. The Hamas position is that of its pro-Iranian leadership in Syria rather than more pragmatic wing in Gaza. Faced with unrestricted weapons supply to Hamas from Egypt and eyeing popular protests in the West Bank, Fatah saw its chance for survival, however temporary, in submitting to Hamas. That changes Israeli situation completely: now we face Iran in Lebanon, Syria, the West Bank, and Gaza, plus a Muslim Brotherhood state in Egypt. Add pro-Iranian Turkey in the Mediterranean to get the picture.
The first thing Israel must do now is abandon minor checkpoints in the West Bank, which will be the targets of continuous attacks, and concentrate on sealing her borders against Palestinians. And if Israel wants to finish off the Palestinian unity government, she can do so in a moment by ending the tax transfers.