The Olmert government in Israel and the Palestinian Authority in the West Bank, headed by Mahmoud Abbas, are in the midst of renewed political activity, encouraged by intensive American efforts. There have been frequent meetings, discussions of an agreement of principles and plans for a regional conference. Although there still are many problems in the field, like the amnesty agreement for wanted men that the two sides haven't managed to finalize, there certainly has been progress. The liaison committees between Israel and the Palestinian Authority have begun operating again, the government headed by Prime Minister Salam Fayad is receiving substantial financial support, and the security services in the West Bank are beginning to be restored.

The Palestinian media has been reporting that a new city is being planned in the West Bank, between Nablus and Ramallah. One newspaper said it would be a top-priority national project: the first new Arab city since Arab conquerors founded Ramle 1,500 years ago. The Americans and the Saudis will fund the construction, which will provide work for tens of thousands of unemployed Palestinians.

This backdrop makes an apparently marginal disagreement interesting. The dispute in question began after Israel announced that it would allow a few dozen Palestinian refugees who fled Iraq to return to the West Bank. The refugees are members of families that lived in villages in the southeast Carmel region. The Iraqi army, which reached northern Samaria in the 1948 War of Independence, was assisted by some of the residents of those villages. After the Arab defeat, they were allowed to go to Iraq, and lived there until they were compelled to flee, due to the war there. Some had been living in temporary camps on the Jordanian and Syrian borders, and now Israel is allowing a few dozen of them to move to the West Bank and become PA citizens.

The problem, as explained by Palestinian newspapers, is that in accepting the right to be naturalized in the West Bank, they must give up their United Nations refugee certificates. From a Palestinian nationalist perspective, this is practically treason, since it means giving up the right of return. In the past 60 years, almost all Palestinian political statements have completely rejected the idea of resettling the refugees anywhere other than where they used to live in Palestine.

Hamas representatives expressed fierce opposition to the Iraq refugees giving up their UN certificates. Many members of Fatah and the other Palestinian factions joined Hamas in condemning the move.

The matter is primarily a symbolic one, but Hamas spokesmen - led by political adviser Ahmed Yousef - have said in the past few days that they would torpedo any Palestinian development that runs contrary to their position. This applies to Palestinian elections, along with other political and practical issues going beyond the refugees. Abbas has announced that he wants to move ahead the general elections for the PA parliament and chairmanship. Hamas is opposed, and it clearly won't allow elections to take place in the Gaza Strip. If Hamas calls for a boycott of the elections, it will be impossible to hold them in the West Bank, too. Hamas has a lot of destructive power regarding a variety of other issues as well.

There is an almost unanimous consensus in Palestinian politics regarding the conditions for any agreement with Israel: A Palestinian state must be established on the basis of the 1967 borders, with East Jerusalem as its capital, and there must be some solution to the refugee problem. Even Hamas is prepared to agree to such a deal, in exchange for a long-term cease-fire and cooperation with Israel, though without peace or official recognition of Israel. The Hamas government in Gaza is currently making every effort to show that it is capable of maintaining good governance, law and order. Last week it invited foreign journalists to see what was happening there, and most left with a positive impression.

However, there is no doubt that Hamas is more capable of sabotaging Abbas' policy than it is of ruling. As long as the Hamas leadership has a hope of holding on in Gaza and of influence in the West Bank, there will be relative quiet. But when Hamas loses hope and it becomes clear that Abbas is far from achieving the minimum that the Palestinians are demanding, then the terrorism and violence almost certainly will be renewed. In other words, all the current political activity is liable to turn out to be nothing but bunk. Ultimately, the opinion of many Palestinians will turn out to be right: If Hamas isn't in the game, there is no game.