It’s not yet certain that a political deal announced Wednesday by the long-divided Palestinian Fatah and Hamas factions will stick--similar pacts have been proclaimed and then discarded several times in the last four years.

But one thing is sure: If Palestinian President Mahmoud Abbas moves forward with the reconciliation with the Islamic Hamas movement, it will mean he has written off the Obama administration and the peace process it has tried to broker, once and for all.

Negotiations between Abbas and the Israeli government of Benyamin Netanyahu have been dormant since last fall--as has the administration’s diplomacy (When was the last time George Mitchell was seen in public?) But lately the administration has seemed to be preparing for another push. At a conference in Washington this month Secretary of State Hillary Rodham Clinton promised “a renewed pursuit of a comprehensive Arab-Israeli peace by the administration” and said Obama would make a major speech on the subject.

Obama himself told Jewish leaders at a White House meeting in March that he believed Abbas was ready to make peace with Israel. But now it seems the Palestinian leader was headed in another direction entirely. In secret negotiations brokered by Egypt, he reportedly agreed to form a unity government for the Fatah-controlled West Bank and Hamas-dominated Gaza Strip, and to hold long-postponed elections for new leaders within the next year.

Many Palestinians have long wanted an end to the Fatah-Hamas feud and the divided Palestinian government. But for Israel and the Obama administration, the reconciliation spells a disaster. According to reports Wednesday, it probably will mean the end of the West Bank administration headed by Salaam Fayyad, a technocrat highly respected by both Americans and Israelis. If so, Congress will almost certainly suspend $400 million in annual U.S. aid. It could mean the reorganization of Fatah’s U.S.-trained security forces, which have worked with Israel to keep the peace in the West Bank for the last several years, and their eventual integration with the cadres of the Iranian-backed Hamas.

The deal will also end any serious prospect of peace talks--since Hamas is most unlikely to accept longstanding Western demands that it accept Israel, renounce violence and abide by past Israeli-Palestinian agreements. In recent weeks Hamas’ fighters have returned to firing mortars and missiles from Gaza at Israeli cities--including one missile that was aimed at a yellow Israeli school bus.

Netanyahu has been working on a new peace initiative that he planned to unveil before the U.S. Congress next month, and that could have involved withdrawals of Israeli troops from parts of the West Bank. If it goes forward, the Palestinian deal will “slam on the brakes,” an Israeli official told me. “Any effort to move forward would be completely stopped by this.”

Abbas apparently doesn’t mind. For some time he has been working on a differnet initiative: a plan to seek an endorsement of Palestinian statehood by the UN General Assembly at its meeting in September. The Obama administration has publicly opposed the idea, and Netanyahu has warned that Israel might respond with unilateral steps of its own.

But Abbas seems deeply disillusioned with Obama. He recently trashed the U.S. president in an interview with Newsweek, saying he had mismanaged the issue of Israeli settlements. And the Palestinian leader wrote Netanyahu off as soon as he took office two years ago, concluding it would be impossible to strike a deal with him.

Netanyahu responded to news of the Hamas-Fatah deal by saying that “the Palestinian Authority must choose either peace with Israel or peace with Hamas.” The Palestinian announcement took the Israelis by surprise; likely the Obama administration was also blindsided. It’s entirely possible the deal will crumble in the coming days or weeks. If it doesn’t, the Obama administration will have to scramble to adjust to a radically new situation in yet another Middle Eastern land.