A last-ditch effort prevented clashes over the weekend between units affiliated with Palestinian Authority Chairman Mahmoud Abbas and the operational force of Hamas. It was the clash for which the Palestinian media had prepared the public in the West Bank and Gaza, under the name "bloody Saturday." The leaderships of Fatah and Hamas understood the extent of the catastrophe of the civil war they are bringing down upon their people - and side-stepped it. Abbas, who had planned to declare the dispersal of the Hamas government and the deployment of security forces in Gaza to face off against Hamas' operational force, delayed giving that order.

In this context, Palestinian politics is overflowing with compromise and mediation proposals. The proposal everyone is talking about now includes the following components: Hamas leader Khaled Meshal will come to Cairo bearing authorization in principle to arrange for the release of Gilad Shalit in exchange for the freeing of about 1,000 Palestinian prisoners. Shalit's release is one of the cornerstones of the agreement with Abbas concerning a new Palestinian government. Also Syrian representatives (who said they prefer that the arrangement be made in Damascus) are to arrive in Cairo, along with mediators from Qatar, who have prepared a draft of a political platform for the new Palestinian government. European observers will also be present.

The new political platform is based on the "prisoners' document." It does not contain recognition of Israel (which is not mentioned at all). However, it does contain a willingness to accept past agreements that "ensure Palestinian interests."

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The new Palestinian cabinet is supposed to consist of technocrats who represent the various Palestinian factions. The favorite for prime minister is Munir al-Masri, a generous businessman who is considered to be the "Palestinian Rothschild." The establishment of this cabinet will allow the lifting of the diplomatic boycott on the PA, and renewal of the flow of money to it. Its mandate, however, will be to rule for only one year. At the end of that period, general elections will be held among the two Palestinian bodies now grappling with each other - for the presidency (i.e., Abbas' job), now controlled by Fatah, and for the parliament, now in the hands of Hamas.

It is doubtful if this compromise accord will pass, and even if it does, it is difficult to see how it will be implemented. The power struggle between Fatah and Hamas will not be quietened by this or that agreement, but rather only if they go along with a radical change in the economic and social reality in Gaza - a matter in which Israel plays a key function.

First of all, Israel's government has to return the money to the PA that Israel owes it, amounting at present to about NIS 1.5 billion. This is money that belongs to the PA, and the claim that it will fund terror is ridiculous. If there is one thing in Gaza that does not suffer from budgetary problems, it is terror. Money and assistance for Palestinian terror comes from Iran, from Hezbollah, from Syria and from groups of Muslim extremists in Arab countries and elsewhere in the world. And in general the problem with terror is not money, but rather motivation - the urge to carry out attacks. The real infrastructure for terror is not weapons or cells, and not even incitement. The real infrastructure is idleness and frustration, 70-percent unemployment, lack of hope and bitterness.

The government of Israel can and must help the Palestinian economy by renewal of subcontracting work to Israeli factories in Gaza, where labor is cheap - such as in textiles, shoe-making and other manufacturing. That should be in addition to the export of agricultural products from Gaza, which has provided hundreds of thousands of jobs. Now everything is paralyzed because of the blockage of the border crossings, a problem to which a solution can also be found - for example, passage by way of Egypt to the Nitzana terminal. After all, there are no weapons tunnels there.

In addition, infrastructure projects should be started up again in Gaza involving the port and the utilization of natural gas on the coast. More Palestinian laborers should be allowed into Israel and industrial zones should be established. All this will not only make things better for Gaza, but also for Israel, because this is the only way to destroy the terror infrastructure.