In theory the Palestinian democracy may have cast off too soon in such stormy seas, but in practice it is an accomplished fact, and the question is, can some political rudder be installed with Hamas at the helm? The first practical problem that Europe and the United States must address is how a Palestinian government controlled by Hamas will be funded. The Palestinian Authority's annual budget is $1.6 billion, the majority of which comes from Europe, which has indicated it won't continue to finance a Palestinian government controlled by Hamas. Clearly, the United States government shouldn't, either, which means the $150 million in aid scheduled to go the Palestinian Authority in development projects cannot now occur.
Bush was right when he said of Hamas, "I don't see how you can be a partner in peace if you advocate the destruction of a country as part of your platform. And I know you can't be a partner in peace if your party has got an armed wing."
That said, what policy should the U.S. government pursue now?
One option is to withhold any funding until Hamas either renounces its use of violence and its intention to destroy Israel or its government collapses. The problem with this option is that there may be undesirable sources of money, i.e., Al-Qaida, Iran and others within the radical Islamic movement willing to fund a Hamas-controlled Palestinian government. If we allow a Hamas government to struggle and collapse for lack of revenue, we may only increase the likelihood that the Palestinian Authority will implode into a failed experiment in democracy and become a breeding ground for terrorism.
The good news is that in spite of Hamas' continued anti-Israel rhetoric and its refusal to disarm, there has existed a yearlong cease-fire - the product of a complicated four-way negotiation between Israel, the Palestinian Authority, Egypt and Hamas - that actually has been observed better than the cease-fire between Israel and Fatah. If Hamas is not to suffer the same fate as Fatah at the hands of voters, it will need to do what Fatah could not - provide security, end corruption, deliver day-to-day services and advance negotiations with Israel toward final establishment of a Palestinian state. Hamas has every incentive now to maintain the cease-fire.
Perhaps this same back-channel mechanism that gave rise to the imperfect cease-fire with Hamas can also be used and expanded to convince Hamas to begin to accept the state of Israel as a fait accompli. Now is clearly the time for creative diplomacy.