The agreement between Fatah and Hamas to end the schism that has plagued the Palestinian system since June 2007 surprised not only the world but also most Palestinians. More than anything, it reflects the profound changes the Middle East is experiencing and the new regional dynamics unleashed by the ouster of Egypt’s Hosni Mubarak. For the better part of four years, Palestinian reconciliation was not an option. From the perspective of PLO, PA and Fatah leader Mahmoud Abbas, it came down to a simple choice: US-sponsored bilateral negotiations with Israel, which, accompanied by Western funding and other forms of support, would maintain Fatah control in the West Bank and lead to an independent Palestinian state; or Palestinian reconciliation, which would produce renewed international sanctions while strengthening the relative position of Hamas.

Egypt was critical to maintaining this equation. Under Mubarak, Cairo monopolized reconciliation talks; but its proposals were formulated for rejection by Hamas. It then used the failure of its mediation as a pretext to collude in Israel’s punishing blockade of Gaza. At the same time, Egypt deployed its considerable clout to provide cover for Abbas’s increasingly compromised diplomacy and pressured him on America’s and Israel’s behalf when further Palestinian concessions were required.

As the division of the occupied territories into separate Fatah and Hamas fiefdoms solidified, vested institutional, economic and political interests emerged on both sides of the divide. In the West Bank the government led by Salam Fayyad owed its very existence to the schism. In Gaza Hamas developed a taste for arbitrary practices whose denunciation had helped it win the 2006 legislative elections. These comforts and privileges were in turn sustained by a thriving underground economy—literally, through hundreds of tunnels—along the border with Egypt. The main legacy of both governments is a severe blow to Palestinian pluralism and levels of repression that would have been unthinkable under Yasir Arafat.

Egypt’s transition and the prospect of further regime changes in the region left Abbas strategically weakened; but Barack Obama deserves equal credit for the recent Palestinian agreement. Having shattered every Palestinian illusion about US-sponsored diplomacy by acquiescing in Israeli Prime Minister Netanyahu’s intransigence—most notably by thrice leading Abbas by the nose on the issue of an Israeli settlement freeze—the US president performed the miraculous feat of convincing Abbas that Palestinians had to explore alternatives to negotiations, because Washington would never deliver on an Israeli withdrawal from the occupied territories. Indeed, the “Palestine Papers,” leaked by Al Jazeera this January, demonstrated not only the extent to which Palestinian negotiators were prepared to jettison basic rights but also Israel and America’s insatiable appetite for more concessions, dealing a further body blow to the PA leadership’s already shattered credibility. If diplomacy as practiced required a Palestinian schism, the alternatives—including the chosen path of a UN proclamation of Palestinian statehood in September—are strengthened by a unified Palestinian polity. Particularly so since both Fatah and Hamas have now identified a sovereign state in the occupied territories as their strategic objective.

While previously Abbas had been the primary obstacle to reconciliation, conventional wisdom had it that Hamas—no fiery advocate of this objective—in the wake of Mubarak’s ouster would show even less interest. Perennially assured that time is on their side, the Islamists appeared to be waiting for the Muslim Brotherhood to gain a foothold in Cairo and hoping that Abbas would self-destruct.

Several factors persuaded Hamas that time is not only a friend. Within the occupied territories, the emergence of a youth movement operating outside the strictures of the established system seemed to be growing fastest in Gaza—whose rulers surely recognized that if Arab uprisings are about bread and freedom, Gaza was a more logical point of departure than Tunisia. Second, the Islamist leadership quickly recognized the benefit of resetting relations with the new Egypt. In exchange for the latter’s achievement of reconciliation, the blockade of Gaza is gradually being lifted, and Hamas is no longer a dirty word in the most important Arab state. And more recently, the extension of the revolt to Syria, where the Hamas exile leadership is based, has let Hamas see that it needs all the friends it can get in uncertain times.

Precisely because the agreement amounts to a maintenance of the status quo in the occupied territories, it is unlikely to unravel as quickly as the ill-fated Mecca agreement of 2007. That said, there are also key challenges—such as the release of political prisoners in the short term and, over the course of the next year, the conduct of elections and the integration of Hamas and Islamic Jihad into the PLO.

The more pertinent questions are whether Palestinian pluralism can recover to challenge an attempt by Fatah and Hamas to share hegemony under a new guise. And, more important, whether any of this makes a difference to the strategic issue of achieving Palestinian self-determination. The two are not unrelated. Only if the Palestinian national movement is set right, and re-established on an inclusive basis that represents and mobilizes its various political and geographic constituencies, can an effective strategy for self-determination be formulated and implemented. It is a profound challenge that under the circumstances is nothing short of existential. For all its shortcomings, the current agreement provides an opportunity—perhaps a final one—to overcome it.