Institution-building is the only policy that promises to lay the groundwork for the creation of a successful Palestinian state.
Dumping Fayyad for phoney 'unity' would be wrong
After intensive Egyptian efforts to reconcile Fatah and Hamas, the two parties have pledged to form a new "unity government" by the end of this month, and to begin planning for national elections.
The two groups have made such pledges several times since 2007, but these have always gone unfulfilled. The prospects for real reunification remain fairly remote.
Because both sides lack political incentive to share power, and given the huge divisions between them on virtually every issue, genuine national reconciliation is likely to remain elusive.
In the context of the Arab Spring, the principal demand of the Palestinian people has been not regime change or even reform, but reconciliation. Palestinians know that the division between Hamas rule in Gaza and the Palestinian Authority in the West Bank, a split that started in 2007, is debilitating to the national cause.
Israel and others question what talks with the Palestine Liberation Organisation (PLO) can produce, given Hamas' opposition to negotiations and a two-state solution.
Palestinian Islamists and nationalists still disagree on a huge range of issues, including the recognition of Israel, the use of violence, the role of religion in society, women's issues and many other questions.
These profound disagreements, and the practical problems of sharing power, mean that the grounds for reunification just do not exist. The division between Gaza and the West Bank could drag on for quite a long time.
But the Palestinian national identity is so strong that a permanent separation is extremely unlikely. Eventually reconciliation will come. The question is, on whose terms?
The continuing Egyptian efforts are only the latest in a series of attempts by Arab states to broker reunification. Saudi Arabia tried and failed early on. Last year, Qatar brokered a deal between Hamas policy chief Khaled Meshaal and the Palestinian president, Mahmoud Abbas. But that pact was seen by many in Hamas, particularly in Gaza, as too advantageous to Mr Abbas; it was never implemented.
Since then, the two sides have repeatedly pledged to implement the existing agreement or create a new one. Egypt recently said both parties have committed, yet again, to implementing the pact they signed in Egypt in May 2011.
There are signs of movement, however symbolic. The PA recently allowed Hamas to hold its first West Bank rally in years. Hamas reciprocated, permitting a huge rally in Gaza. Both sides have released prisoners as "goodwill gestures".
Some observers speculate that Hamas could not help notice the size and enthusiasm of the pro-Fatah rally. Hamas is widely perceived among Palestinians as primarily responsible for the lack of progress on reunification and new national elections. And Hamas is undoubtedly responding to pressure from Egypt, Qatar and its other new Arab backers to be more flexible in dealing with Mr Abbas.
However, in a reversal of fortunes from the negotiations in Doha about a year ago, Hamas now finds itself relatively strengthened by recent developments. The cash-strapped PA is struggling to meet payroll and faces strikes and other protests based on economic grievances. Hamas and some Fatah factions have used these protests to try to settle scores with Prime Minister Salam Fayyad, and undermine his constructive institution-building programme.
Indeed, the future of Mr Fayyad - who is neither a member of Fatah nor a PLO official - and his strategy remain contentious. He is despised by Hamas on ideological grounds, and disliked by some in Fatah who resent his independence and his reformist agenda.
The worst-case scenario would be an agreement predicated on creation of a new, largely symbolic, "unity" government without Mr Fayyad, one that abandons his institution-building plan and the constructive logic that informs it.
Real reunification will require a merging of security forces, which in effect will mean the victory of one vision of the Palestinian national agenda over the other: Hamas's commitment to armed struggle and confrontation with Israel, and its willingness to subordinate the Palestinian cause to the broader regional Islamist agenda, or the determination of Mr Fayyad and his colleagues to keep working practically on the ground to build the framework for a successful independent Palestinian state.
Clearly there is no present prospect of merging the security forces, or of national elections to resolve the issue of political legitimacy.
But conceivably, to placate public opinion and regional pressures, Hamas and Fatah might agree to form a unity government that dispenses with Mr Fayyad and the institution-building project.
But this "cure" would be worse than the disease, since institution-building is the only policy now available that offers practical, meaningful prospects for immediate improvements in daily life.
Given the diplomatic impasse between Israel and the Palestinians, institution-building is the only policy that promises to lay the groundwork for the creation of a successful Palestinian state, and that state is the sine qua non of an end to conflict.
Real Palestinian reconciliation requires consensus on national goals. And political legitimacy can be established only through national elections, not another stopgap "unity" cabinet.
Symbolic reconciliation that does not resolve Hamas-Fatah differences, but abandons institution-building and practical preparations for independence, would do the Palestinians far more harm than good.
Hussein Ibish is a senior fellow at the American Task Force on Palestine in Washington, DC
On Twitter: @Ibishblog