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Dialogue will develop over time between Palestinian Authority Chairman Mahmoud Abbas and the head of the political wing of Hamas, Khaled Meshal, and there will be no separation between Gaza and the West Bank, Israel Defense Force Chief of Staff Gabi Ashkenazi told the Knesset Foreign Affairs and Defense Committee yesterday.

The deputy head of Military Intelligence, Colonel Ronen Cohen, who gave most of yesterday's briefing, told the lawmakers that Hamas wants to return to dialogue with the countries in the region.

"For that to become possible, it is essential from its perspective to go back to talking to Abu Mazen [Abbas]," he said.

Cohen told the lawmakers that MI has not seen seen any action over the past few days by the PA against Hamas in the West Bank.

"The dust has settled and life has gone back to normal," Cohen said, adding that at the same time, the PA has an interest in proving that Hamas in Gaza has failed and "life is flourishing and stable."

Cohen also said MI believed Hamas could rehabilitate itself in the West Bank. "It must not be forgotten that it won the election in almost all the big cities. It is not the PA that is preventing Hamas from establishing itself militarily in the West Bank, but rather the IDF and the Shin Bet security service. As long as the IDF is in the territories, Hamas can't reach the same military level as in Gaza," Cohen said.

The deputy MI chief also told the committee that in the West Bank and in Gaza there are "two governments and two entities" that can hold on for a long time.

Cohen said Hamas, which is suffering a manpower problem in Gaza, has begun drafting people from the former PA and Fatah security forces. For example, it is hiring professionals who worked at the border crossings, assuming that the crossings will open and Hamas will need them.

According to Cohen, Hamas political leader Khaled Meshal lost control of events during the battles between Fatah and Hamas, and he is now "taking back control of Gaza" because "he is sitting on the money that is transfered to Hamas in Gaza."

Hamas in Gaza is now conducting limited terror operations, mainly placing explosive devices near the fence and firing mortars at IDF outposts. However it is allowing Islamic Jihad to fire Qassams at Israel. The more Hamas establishes itself in Gaza, the more it will be able to bring in know-how, money and weapons and be able to strengthen its military power, Cohen said.

Cohen also said Hamas' long-term goal in the Gaza Strip is to institute a government according to Islamic law. "It will be a slow and gradual process, and Hamas is still formulating plans on how to implement it."

MK Israel Katz (Likud) was critical of a gap between Prime Minister Ehud Olmert's statements to the cabinet on Monday and Cohen's statements yesterday about the PA's struggle against terror.

"While Olmert praised the work of the PA on disarming the gunmen, the army has made clear that the struggle against Hamas has faded and no action is being taken." Katz called on Olmert to "stay away from a policy of illusions, concessions and withdrawals, that will bring about the collapse of the PA and turn the West Bank into a second Hamastan."