For any dispassionate observer it is easy to see which side “won” the latest battle between Israel and the Palestinians in the occupied Gaza Strip. After eight days of bombardment on one of the most densely populated places on earth, 162 Palestinians were killed, including ninety civilians, among them twenty-six children. In what an Israeli commentator called a “drizzle” of retaliatory rocket fire, six Israelis were killed, four of them civilians.

Palestinians are hardly dispassionate observers. For them, the fact that Israel agreed to a cease-fire while the military wing of Hamas, along with other factions, was pitching rockets into its territory was a victory against “deterrence,” in the name of which the Gaza operation had been launched. So too were the Hamas rockets that managed to reach Tel Aviv and Jerusalem. The sight of Israelis running to shelters in these and other cities gave visceral satisfaction to a people who have lived under aerial bombardment for years without bomb shelters.

“History will mention that Gaza once hit Tel Aviv and Jerusalem with rockets,” boasted a Hamas fighter in Gaza. It was a widely shared sentiment in Gaza and the West Bank, where Hamas’s popularity has soared.

And that of Mahmoud Abbas and his Palestinian Authority has tanked. While Palestinians were bearing the brunt of an Israeli military offensive largely bankrolled by US taxpayers and tacitly condoned by members of the European Union, President Abbas was urging both powers to support or at least not oppose a PA bid at the UN General Assembly to become a non-member observer state. Palestinian officials present the proposal as a last-ditch effort to rescue what remains of a two-state solution eroded by years of stalled peace talks and aggressive Israeli settlement building.

The European Union is likely to split three ways on the proposal, with some countries voting for it, some voting against and some abstaining. But the EU as a body wants certain “assurances” from the PA. One is that after any upgrade in status, the Palestinians return immediately to peace negotiations without conditions, dropping any demand for an Israeli settlement freeze. Another is that the Palestinians pledge not to use their new legal status as a state to refer Israel to the International Criminal Court for alleged war crimes in the occupied territories. Both are assurances Abbas will find very difficult to give.

Washington has opposed any UN move that lacks Israeli approval, and is anyway wary of the world body becoming embroiled in the Israeli-Palestinian conflict.

As for Israel, it initially warned that any form of UN-recognized statehood would terminate what remains of the Oslo Accords, which, according to Tel Aviv, permit only bilateral negotiations to resolve the conflict. More recently, however, Israel has signaled that it may respond to a purely symbolic recognition of Palestinian statehood at the UN with a show of indifference. Should the PA go beyond symbolism, however, the very least that Israel would invoke is financial sanctions; the very worst, a toppling of the Authority.

These tangled diplomacies have only underscored what for most Palestinians and Arabs the confrontation in Gaza seemed to affirm: that Hamas’s policies of resistance and defiance pay greater dividends than Abbas’s strategy of conciliation. The popular perception of a Hamas military victory in Gaza, coupled with a PA political defeat in Ramallah, has contributed to a new reality in the occupied territories in which Hamas—and particularly its military wing—is now openly challenging Abbas’s Fatah faction as the dominant party.

It has also created a sea change in Hamas’s attitude to the Arab Spring. In 2011, both Fatah and Hamas suppressed Palestinian protests for fear they could evolve into mass demonstrations against their rival Palestinian regimes in the West Bank and Gaza. Today Hamas (though not Fatah) is consciously trying to integrate the Palestinian struggle with the regional movements for change. Via its Islamist alliances, it is inserting Palestine into the Arab Spring and the Arab Spring into the West Bank and Gaza. Fatah has been powerless to prevent this slippage of its hegemony of the national movement. “Hamas is untouchable,” a Fatah security officer in Hebron told The Economist. “No one can think of arresting them.”

The reason is not only Hamas’s military strength but the new strategic depth it has gained through its close ties with the Muslim Brotherhood–backed government in Egypt. Not only did this have a direct bearing on the cease-fire in Gaza; it strengthened Hamas throughout the occupied territories.

While Abbas was marooned in Ramallah seeking the merest sign of sovereignty from Western leaders, Hamas in Gaza has been acquiring all the trappings of a mini-state. In the last month, Hamas Prime Minister Ismail Haniyeh has played host to the emir of Qatar, the prime minister of Egypt, the secretary general of the Arab League and the foreign ministers of Turkey, Iraq, Jordan, Lebanon, the PA, Qatar, Tunisia, Saudi Arabia and Sudan, with most of them visiting at the height of the Israeli offensive.

Egyptian President Mohamed Morsi, who became Hamas’s proxy in negotiations with the United States and Israel, helped bring about a fragile yet so far durable truce. Perhaps more significantly, he has helped draft an agreement that, if implemented, would significantly relax Israel’s blockade of Gaza.

Given the sense of unity born of the conflict, many Palestinians are demanding fresh elections to the PA. Abbas is about to complete his second term as president despite having been elected only once, in January 2005. In fact, since Hamas ousted Fatah in the factional war in Gaza in 2007, both movements have ruled their respective terrains as elective dictatorships. In the current climate Hamas would probably sweep any poll, Fatah would lose and Abbas could be wiped out. For these reasons, neither Israel nor the West wants new elections.

A likelier scenario is that greater efforts will be made by states like Egypt, Qatar and Turkey at brokering Hamas-Fatah reconciliation. This could open the way to a new government of national unity. On the ground there are tentative steps toward rapprochement in response to Israel’s Gaza offensive. For example, Fatah official Jibril Rajoub recently signed a reconciliation agreement with Hamas leaders at a thousand-strong demonstration in the West Bank. Hamas has said it would free the remaining Fatah men in its Gaza jails, and Hamas political leader Khaled Meshaal has endorsed Abbas’s bid for observer state status at the UN.

Militant reconciliation mirrors the Palestinian mood. No matter what happens at the UN, there is little appetite among Palestinians for diplomacy and none at all for negotiations, which are increasingly seen as futile, given the settlement-building policies of the Israeli government and American and European indulgence of them. There is more enthusiasm for the apparent position of the Egyptian government, which is to consolidate the cease-fire into a long-term arrangement and act to end Israel’s blockade of Gaza.

As for Hamas, it seeks not negotiations with Israel but recognition of its role in bringing about the truce, and acknowledgment among Palestinians and the wider Arab world that resistance rather than negotiation is what will bring change to the occupied territories. In the shaky aftermath of Gaza’s latest round of fighting, those goals seem to have been accomplished.

For another take on the UN vote on Palestinian statehood, check out Robert Dreyfuss’s latest.