With the world's focus on the recent war, a less-noticed aspect of the current Palestinian malaise is the expiry of President Mahmoud Abbas’ term this January. While the two-state peace solution with Israel is premised on an emerging Palestinian state with functioning institutions, the constitutional legitimacy of the Palestinian Authority is dwindling. Without a political process between Hamas and Fatah, the territories will become two statelets run by de-facto rulers.

There are two scenarios for overcoming the Palestinian stalemate. One option would be to form a government based on national unity, bringing the two groups together to administer Palestinians’ affairs. The second option is to hold Presidential elections as soon as possible. Fatah promotes a combination of both options: Forming a government of national unity in order to hold new elections, not only for President, but also for parliament, even though parliament’s term only expires in January 2010.

The problem with both options, however, is that they require Hamas and Fatah to cooperate closely. Presidential elections would be meaningful only if both sides could campaign freely across the Territories. However, such cooperation looks unlikely after the brutal Hamas takeover of Gaza in 2007 and Hamas's repression in the West Bank by Fatah security services. The relationship between the two groups has never been worse.

There is a third option: Palestinians could hold a referendum on whether Abbas’ term should be extended for one year, with the mandate to engage in genuine peace negotiations with Israel. A referendum could be a confidence-building measure between Fatah and Hamas, as both would have to cooperate in implementing it. At the same time, it would lower the stakes by avoiding the "winner takes all" outcome of a presidential election and possible parliamentary elections.

Both parties would benefit: Fatah would gain an extension of Abbas’ term and Hamas could re-engage politically. There would need to be an agreement that any peace deal would be put to another referendum, to avoid – from Hamas’ point of view – giving carte blanche to the president. In addition, Hamas may want assurances that parliamentary elections would be held in 2010 according to schedule, along with the postponed presidential elections.

Among recent hints of Hamas’ pragmatism, its leader Khaled Meshaal, who is considered to be a hardliner, suggested in an April 2008 statement that Hamas would respect a peace deal if it were supported by a majority of Palestinians. A referendum would allow Hamas to gradually shift its positions in a face-saving manner. The underlying message of incentives for Hamas would need to be that in the context of a genuine peace process, the movement will be engaged politically to the same degree that it sheds its military and absolutist positions. Support of a referendum process would be considered Hamas' first step in that direction. Hamas would thus be indirectly bound to a peace process, thereby reducing incentives to spoil it.

A referendum would allow Palestinian voters to turn their wish for a just peace into a political mandate. According to opinion polls, the majority is consistently in favour of a peace deal with Israel, though this majority has waned over the last few years. Palestinians may view this solution favourably, since most of them resent the division of the West Bank and Gaza and would welcome any rapprochement between Fatah and Hamas.

Of course, the referendum has potential problems. Currently there is no explicit legal basis for a referendum so the two parties would have to agree on a referendum law or decree. The Palestinian Election Commission, however, has demonstrated its ability to manage a democratic electoral process – in 2005 and 2006 – and would be able to do the same in a referendum. A referendum is not a great solution, but it may be the best in a range of bad options.

In Palestine, the situation can always go from bad to worse, as the recent war has shown. A referendum may arrest further division between the West Bank and Gaza, while giving impetus to the peace process with Israel, yet without expecting too much mutual cooperation from the two main Palestinian groups.

* Michael Meyer-Resende is coordinator of Democracy Reporting International, a Berlin-based group promoting political participation (www.democracy-reporting.org). This is his personal opinion. Jan Künzl is a freelance writer based in Berlin. This article was written for the Common Ground News Service (CGNews).