Silver-haired Fatah Party members in dark, pinstriped suits draped with kaffiyeh scarves bearing the colors of the Palestinian flag greeted each other with kisses as they converged in Bethlehem for the movement’s first congress in 20 years.

On Tuesday, more than 2,000 delegates from all over the Arab world came to the conference, which was held in the hall of a private Christian school near the Church of the Nativity. The last time Fatah convened a congress was in Tunis in 1989, when the movement’s leadership was living in exile.

Aside from choosing new leaders and adopting a new political platform, the congress aims to help rebuild the once dominant but now struggling party of Yasser Arafat.

“It’s an important step in the life of Fatah and comes at a critical time in the political life of the Palestinian people,” said Nasr Jom’a, a Fatah member of the Palestinian Authority parliament. “Fatah has deteriorated over the years. Its political agenda may have been convincing, but its leaders have become corrupt.”

Battling the image of a corrupt party that is out of touch with the Palestinian street, Fatah is locked in a bitter power struggle with its rival Hamas, the Islamic terrorist group. Hamas defeated Fatah in Palestinian legislative elections in January 2006 and violently wrested control of the Gaza Strip from Fatah in June 2007.

The rivalry between Hamas and Fatah — along with discussing how to resolve the deadlock between the two — was front and center at the congress.

Jibril Rajoub, the former head of the Palestinian Authority’s internal security force and a leading contender for a top Fatah role, said the conference was critical to achieving a “strong, unified political platform and a place to find a mechanism of how to manage the conflict with the Israelis.”

Speaking to an Israeli journalist in the fluent Hebrew he picked up during his years in an Israeli prison, Rajoub said military action against Israel was still very much on the table for Fatah, despite its involvement in the peace process.

“Fatah will never give up on the armed struggle until we get our state,” Rajoub said. “Until then, this is just a time out for tactical reasons.”

Political observers say part of the reason for tough talk by Fatah members is an attempt to show that the party can be a viable and politically aggressive political alternative to Hamas.

In an emotional two-hour speech at the congress’ opening session, P.A. President Mahmoud Abbas talked about resolving the Hamas-Fatah split and suggested holding new elections.

“We need unity with Hamas,” Abbas said. “We know you are part of Palestine. We are two parts that connect each other and should not divide each other.”

Those divisions, however, were apparent at the congress. Earlier in his speech, Abbas referred to Hamas as “coup makers,” and Hamas refused to allow 400 Fatah delegates in Gaza travel to the conference in the West Bank. But several snuck out via underground smuggling tunnels linking Gaza to Egypt, and some came by donkey. One woman even disguised herself as a Bedouin to make it across undetected.

Israel made special accommodation to allow attendance by members from enemy countries such as Syria. Fatah’s old guard, some of them political exiles from countries like Lebanon and Syria who had not been in the West Bank for decades, mixed with younger Fatah members at the conference.

Israeli Arab Knesset member Ahmed Tibi was among the Israelis to attend the congress. He said Tuesday that the future Palestinian state must be free of Jewish settlers and that Israeli Arabs were an inseparable part of the Palestinian people, according to media reports.

Reacting to statements made at the conference, Israeli Defense Minister Ehud Barak told the Knesset’s Foreign Affairs and Defense Committee that Israel shouldn’t stress over the rhetoric.

“We shouldn’t ignore it, but neither should we make too much of it,” he said, according to media reports. “The test will come after the conference. We will see what the leadership brings to the negotiating table. That’s what matters.”

Jehad Hamdan, a longtime Fatah member and former economics professor who now heads the institute responsible for civil servants in the West Bank and Gaza, told JTA that Fatah has made some progress in correcting its financial “misadministration” – what others call corruption.

Eating a breakfast of hummus at Bethlehem’s fanciest hotel, the Jacir Palace Intercontinental, Hamdan said he believes Fatah still has a support base.

“I don’t think Fatah has lost the people,” he said. “Fatah is still strong, but it does need to renew itself.”

Meanwhile, a divide has emerged between the activists based in the West Bank and the exiles. Those living abroad tend to have a harder-line approach on issues like armed resistance. West Bank party activists are generally seen as more tempered and pragmatic, having lived through two intifadas.

Surveying the gathering, Ahmed Mohammed Deik, a Fatah delegate from Yemen, said the main challenge now for Fatah is not Israel or the wider world, but its main Palestinian rival.

“The world supports our national project,” he said, “but Hamas, that is our biggest problem.”