The transformation of the IRA shows why Israel should talk to Hamas

The Israeli novelist Amos Oz once said Israelis and Palestinians were like patients who know exactly what painful surgery they need to undergo and are ready to face it. The trouble is, their surgeons are cowards. That's certainly how it seems now. The two peoples have come, without enthusiasm, to a realisation of what will have to be done, what will have to be sacrificed, to live alongside the other. Polls show large majorities on both sides ready to back a peace deal on the now-traditional lines: two states, one for each nation. A recent survey had 72% of Palestinians wanting their leaders to sign a peace treaty with Israel. Meanwhile, assorted members of Israel's cabinet have been tripping over each other to offer their own peace plans - recognition that there's a hunger among Israelis to escape the status quo.

Yet the two leaders - the surgeons - are frozen. Tonight Israel's prime minister, Ehud Olmert, will address the Herzliya security conference, an occasion that has come to be associated with high political drama ever since Ariel Sharon used it to announce his planned disengagement from Gaza. Yet few among Israel's punditocracy expect any such thunderbolt from Olmert. Ever since his core unilateralism strategy was discredited last summer by what Israelis call the second Lebanon war - which seemed to prove that unilateral pullouts from once-occupied territory only bring trouble - Olmert has been without an agenda, let alone a vision.

Meanwhile, the Palestinian president, Mahmoud Abbas, is a byword for weakness. With next to no powerbase, even in his own Fatah movement, he has seen a virtual civil war erupt between his men and Hamas, which a year ago won a majority in the Palestinian parliament. More than 60 Palestinians have been killed by Palestinians. Before he can even think about reconciling with Israel, Abbas has to reconcile Fatah and Hamas.

How to navigate around this landscape is the challenge I found Israelis and Palestinians grappling with this week, whether in Jerusalem or Ramallah. Israel's officials speak of presenting Palestinians with a choice. Either they take the path embodied by Abbas, of negotiation and compromise, and reap the rewards - or they stick with the hardliners of Hamas and face the consequences, including economic isolation and a cold shoulder not only from Israel but from the European Union, the US, and beyond. To make that choice easier, Israel will sketch out the "political horizon", explaining what the Palestinians would gain if the Abbas approach prevailed - chiefly a rapid move to statehood on a substantial chunk (but far from all) of the West Bank and Gaza, with resolution of the thorniest issues to come later. That's the choice. As one official put it: "Go with Hamas, and it's isolation, stagnation and a dead end. Go with the moderates and it's international support, an energised process and a clearer horizon than ever before."

It sounds simple enough, but that approach carries multiple problems. The first is credibility. Too many Palestinians will say they've heard Israeli promises before that have come to nothing. They point to the December 23 meeting between Abbas and Olmert where the latter promised prisoner releases and relaxation of checkpoints, none of which materialised. What's more, the Palestinian pollster Khalil Shikaki told me yesterday, moderates face an uphill task when they argue that diplomacy gets results: "Unilateralism badly damaged that idea. Palestinians say, why should we make concessions when Israel has already given away land without any concessions from us?"

Above all, Israel's approach involves a selective blindness, lavishing attention on Abbas as if Hamas did not exist and did not command a parliamentary majority. But there could be another, riskier way - one that would benefit not only Israel but the wider world too.

If Israel decided not to shun Hamas, but to reel it into the peace process, everything could look different. Hamas almost benefits from its isolation, retaining its status as the pure party, unsullied by compromise. If, though, it could, at long last, be brought into a national unity government with Fatah, it would soon have to get its hands dirty.

Until now, the sticking point has been Hamas's refusal to sign up to the three conditions set by the EU, US and UN: recognition of Israel, renunciation of violence and a commitment to abide by existing Palestinian agreements with Israel. The international stance has been clear - either Hamas says yes three times, or it stays in the cold.

But, says one Palestinian analyst, instead of such a black-and-white choice, the international community should start seeing shades of grey. If Hamas can agree with one or two of that troika, then a process of engagement could begin. The trick would be to call on the peace negotiator's old friend, "constructive ambiguity". So if Hamas says it can "respect" existing agreements, rather than "commit to" them, maybe that should be enough (that linguistic difference is the current sticking point between Abbas and Hamas).

For Israel, the advantages would be clear. First, once locked into the process, Hamas would lose its above-the-fray status. Second, it is not a monolithic organisation, and differences between moderates and hardliners would soon be exposed. Third, Israel always used to say that it was not interested in the words Yasser Arafat uttered, it was his deeds that mattered. Well, now Israel could apply that same logic to Hamas - no longer obsessing over the statements Hamas is prepared to make, but over its deeds. If the movement continues, and entrenches, its current ceasefire and, alongside Fatah, works to enforce it among fringe groups such as Islamic Jihad, that should surely speak louder than any number of declarations.

And there is a larger interest at stake here. Currently, the isolation of Hamas has driven it into the arms of Iran, which has been only too happy to play the deep-pocketed sugar daddy, boosting Tehran's ambitions as a regional superpower. But this is a frail alliance. Palestinians are Sunni and wary of any kind of Shia hegemony. Tellingly, Sheikh Yusuf Qaradawi, the spiritual leader of the wider Muslim Brotherhood movement of which Hamas is a part, issued a recent warning against the growing power of Iran and Shi'ism. So Hamas is eminently separable from Iran, which could break up the Shia "arc" of influence that so troubles London and Washington.

Israel disputes all this. If there were moderates in Hamas, it says, Israel would be engaging with them, but there are not. Israelis point to the serial caveats and disclaimers that come attached to any Hamas hint of recognition of Israel's right to exist. What of the recent Hamas statement recognising Israel as a "reality"? That means nothing, one senior official told me yesterday. "I recognise Aids as a reality, that doesn't mean I don't want to defeat and destroy it."

In the end, it comes down to how you view peace processes. Do you believe that the enemy is only fit to take part in a negotiation once it has changed, or that the very act of taking part can change the enemy? The Israeli government believes the former. After the transformation of the IRA in the decade or more of Good Friday talks - from swearing it would never decommission a bullet to standing down its forces - I believe the latter. If Tony Blair wants to put his final months to good use, perhaps he can press this point on all those who need to hear it. Otherwise, the patients will remain stuck in that operating theatre, only getting sicker.

Jonathan Freedland