WILL the Palestinians seize the slim chance of statehood offered by President Barack Obama's pledge to work for a two-state solution of the Israeli-Palestinian conflict? Or will they throw it away because of unresolved inter-Palestinian conflicts? These unspoken questions lay behind the talks which Fatah and Hamas held in Cairo this week, in a last ditch attempt at reconciliation. Three earlier rounds of talks under Egyptian sponsorship ended in failure. This week's negotiations fared little better, so wide is the chasm between these rival Palestinian factions. What is clear, however, is that unless Fatah and Hamas put an end to their bitter political and ideological quarrels and form a unity government, Obama himself will not be able to help them. Palestinian hopes of statehood will evaporate, as so often in the past. But, this time, it could be forever. Continued Israeli settlement expansion has already all but foreclosed any realistic possibility of a viable Palestinian state. Sources close to Khaled Mishaal, head of the Hamas political bureau in Damascus, report that no agreement on a unity government with Fatah is possible unless the Quartet's three conditions of renouncing violence, abiding by past agreements, and recognising Israel are cancelled. Unrealistically, Hamas expects Obama to set these conditions aside. It is almost certain to be disappointed. The Cairo talks appear to have produced limited agreement on certain technicalities – such as reform of the PLO to admit Hamas and other factions – but failed on the crucial question of a unity government because of profound ideological differences. Fatah is insisting that Hamas accept the Quartet's three conditions, whereas Hamas remains committed to the non-recognition of Israel and the ‘logic of resistance', as the only way to restore Palestinian rights. For its part, Fatah is equally committed to its diplomatic strategy of negotiations with Israel – although these negotiations have so far yielded nothing. If Hamas were to accept Fatah's conditions, the sources report, it would lose its constituency, its identity and its raison d'etre. “Hamas has no wish to become another Fatah,” they said. The parties did agree, however, to resume talks in Cairo on May 16, and then bring in other Palestinian factions as well as the Arab League, in order see what degree of unanimity can be achieved. Before a US Congress committee last week – and to the alarm of pro-Israeli members and of Israel itself – Secretary of State Hilary Clinton hinted at a possible softening of America's position towards Hamas. Although the US still considers it a terrorist organisation, she argued that US aid should be allowed to continue to flow to a united Palestinian government, even if it contained officials nominated by Hamas. But any such government, she insisted, would still have to agree to US conditions, notably the recognition of Israel. The matter remains purely theoretical since Fatah and Hamas have so far failed to agree to form a united Palestinian government. Beyond the ideological dispute lies a quarrel over territory. Hamas insists on maintaining control over Gaza, where it believes it still enjoys the backing of the population, in spite of the great suffering endured during Israel's war. Fatah, in turn, wants to maintain its position as the leading Palestinian organisation on the West Bank, even though its freedom is greatly constrained by the Israeli occupation. The bitter inter-Palestinian dispute will greatly complicate the task of Obama's Middle East envoy, George Mitchell. At the same time, it allows Binyamin Netanyahu, Israel's hardline Prime Minister, to claim that there is no Palestinian partner with whom to negotiate. Netanyahu will attempt to hold fast to his policy of avoiding negotiations for a final status agreement, while expanding settlements. Meanwhile, the situation on the ground remains extremely dangerous. The absence of an agreed truce between Israel and Hamas means renewed fighting could break out at any time. In the absence of an agreement on an exchange of prisoners, more than ten thousand Palestinians will continue to languish in Israeli jails, while Gilad Shalit, the Israeli corporal seized by Hamas in June 2006, remains a captive. Crossings into Gaza are closed and the territory remains under siege. Hopes of reconstruction will have to be deferred indefinitely and the population of 1.5 million, eking out a living on international charity, will be condemned to further suffering. In a major 49-page report on “Gaza's Unfinished Business”, published on April 23, the International Crisis Group warns that Gaza could once again reach boiling point. Gaza, it says, is an explosion waiting to happen. It lists the toll from Israel's pitiless 22-day assault last December-January as 1,430 Gazans killed, over 5,300 wounded, 90,000 made homeless, Gaza's seven main textile factories damaged and closed down, 22 of the 29 concrete factories devastated, whole industrial zones flattened, and 60 percent of agricultural land near the border with Israel harmed, leading to a virtual halt of agribusiness. Israel's deliberately disproportionate response to Hamas's home-made rockets must be seen as an attempt to destroy the Palestinians' will to fight. If that was indeed the aim, it has not succeeded, but nor is Palestinian statehood any closer. The Palestinians are not alone in missing an opportunity. The ongoing ‘Cold War' between regional states means that the chance to make their collective voice heard in Washington is being lost. Egypt is fearful that Hamas might radicalize Sinai's Bedouin population and encourage the Muslim Brotherhood to rise against the regime. It accuses Hezbollah of mounting terrorist operations within Egypt on Iran's behalf. Above all, it dreads the thought that Israel might seek to dump Gaza and its problems in Egypt's lap. While the Arab states are crippled by their disputes, the Europeans are little better. Divisions remain inside the European Union over the Arab-Israeli conflict, particularly over how to deal with Hamas. The EU may applaud Obama's engagement in the Middle East, but it remains reluctant to play an independent role. It therefore condemns itself to insignificance. As for the Palestinians, not for the first time in their history they remain fatally absorbed in their quarrels, as if unaware that their national cause is in acute danger of extinction.