The Associated Press reports:

Rival Palestinian factions Fatah and Hamas on Wednesday proclaimed a landmark, Egyptian-mediated reconciliation pact aimed at ending their bitter four-year rift. The declaration was made at a ceremony at the Egyptian intelligence headquarters in Cairo. Western-backed Palestinian President Mahmoud Abbas said the accord ended “four black years” that hurt national Palestinian interests. He also said he would “soon” visit Hamas-held Gaza Strip. The pact provides for the creation of a joint caretaker Palestinian government ahead of national elections next year, but leaves key issues unresolved and makes no mention of peace talks with Israel. Israel has denounced the pact in advance of the Cairo ceremony, because of the militant Hamas’ long history of deadly attacks against Israeli targets. It has equated the deal with a renunciation of peacemaking. Like the U.S. and the European Union, Israel considers Hamas a terrorist organization and says it will not negotiate with a future Palestinian government that includes the Iranian- and Syrian-backed group. . . .

The Quartet of Mideast mediators — the U.S., the EU, the United Nations and Russia — has long demanded that Hamas renounce violence and recognize the principle of Israel’s right to exist. But Abbas aide Nabil Shaath told Israel Radio ahead of Wednesday’s signing that these demands “are unfair, unworkable and do not make sense.”

Perhaps as a sign of the rocky path ahead, the ceremony was almost scuttled. The Israeli newspaper Ha’aretz reported:

The row that threatened to hold up the Egypt-brokered agreement signing of the reconciliation deal began when Palestinian President Mahmoud Abbas insisted on being the sole speaker at the event. Abbas apparently wanted to sit alone by the podium, to emphasize his status as president, despite the fact that Hamas leader Khaled Meshaal was supposed to speak directly following him.

So where does this leave the United States and Israel? Jonathan Schanzer of the Foundation for Defense of Democracies e-mails me: “The Palestinian Authority leaders no longer care what America or Israel say about the conflict or its resolution. If they did, Hamas would not be part of this deal.” He continues, “The notion that America or Israel would be ok with Hamas in the coalition without having Hamas accept the Quartet principles is unprecedented. The history: When the PLO was trying [to] gain world acceptance, Bush and Reagan refused to let them be part of the process until they embraced UN resolution 242. The U.S. should hold to that.”

Former deputy national security adviser Elliott Abrams says that with the signing of the pact the United States should suspend aid to the Palestinian Authority, “if only due to uncertainty.” He added: “The current government is a caretaker government, and we have no idea who will be the next prime minister or finance minister, or what the policies will be.”

Will the “unity” last? Schanzer and other Middle East observers are far from certain that the deal will stick. Schanzer says, “I think Fatah was unable to press Hamas for meaningful concessions. I believe this bluster — telling the West to get used to Hamas’ position — is reflective of that.” Another experienced Middle East negotiator is more blunt, “[T]he leaders hate each other and have spent years trying to kill each other. They have one common interest now, which is politics, internal politics. Neither right now wants a negotiation with Israel. They will have elections so they are appealing to the public desire for unity.”

A senior Senate adviser put it this way: “I think the deal is likely to collapse under the weight of its own contradictions given a little time. In the interim, however, it will undercut the Palestinian drive for recognition at the U.N. in September, especially if Salam Fayyad is dropped as PM. The truth is, Abbas was never much of a partner for peace, but it was tough to persuade people of this. The reality is now a bit harder to ignore.”

If Obama were savvy he’d understand that progress is utterly impossible now, cut aid to maintain our leverage with the Palestinians (how else can we induce the new government to abide by past agreements?) and make certain the Palestinians understand the requirements for a continued relationship with the United States. Whether he will take this opportunity as an escape hatch to move away from his overblown and unrealistic goal of brokering a peace deal is far from clear, however. To the contrary, Obama may now, in the wake of Osama bin Laden’s killing, be even more convinced of his own ability to rise above the mere mortal presidents who preceded him and deliver (by pressuring Israel, if need be) an agreement that would recognize a Palestinian state, albeit one that cannot be trusted to recognize and live in peace with the Jewish state.