By Patricia Zengerle
WASHINGTON (Reuters) - The unity pact between Palestinian President Mahmoud Abbas and the militant group Hamas dealt a sharp punch to U.S.-driven peace negotiations with Israel, but the Americans insisted it was not a fatal blow to the struggling talks.
Washington was stunned by the deal announced on Wednesday between Fatah, the faction that leads the West Bank, and Hamas, which rules the Gaza Strip and is viewed as a terrorist organization by the United States, the European Union and Israel. Israeli Prime Minister Benjamin Netanyahu immediately suspended participation in the peace process brokered by U.S. Secretary of State John Kerry.
But U.S. negotiators are not expected to give up on the process, in which Kerry has invested thousands of hours and a great deal of political capital. There is also little for Washington to lose by monitoring developments, while pushing the two sides toward reconciliation.
"This will probably slow things down, but it will resume at some point," said Aaron David Miller, a former U.S. State Department peace negotiator now at the Wilson Center in Washington.
"There is no need for the United States to walk away from this, and it would be stupid, frankly," he said.
Washington is Israel's closest ally, and President Barack Obama has already faced strong criticism at home and abroad over his handling of foreign policy. Obama has been accused of neglect for Asia - where he has traveled this week - and weakness in Europe, where Russia has annexed the Crimean Peninsula and is threatening eastern Ukraine.
Months of meetings since last summer have produced no sign of progress in the talks, aimed at creating an independent Palestinian state on land captured by Israel in a 1967 war. Palestinians want East Jerusalem to be capital of the state they seek in the occupied West Bank and Gaza Strip, and want Israeli soldiers and more than half a million settlers gone.
Israeli settlement construction has been a major obstacle in the negotiations. Citing security concerns and historic and Biblical links to the territory, Israel says it intends to keep large settlement blocs in any future peace deal.
Netanyahu has made recognition of his country as a Jewish state a requirement for peace. The issue has lately overshadowed other stumbling blocks over borders, refugees and the status of Jerusalem. Palestinians fear the label would lead to discrimination against Israel's sizeable Arab minority, while Israelis say it recognizes Jewish history and rights on the land.
For the United States, giving up on achieving a peace deal would be an unnecessary admission of foreign policy defeat, especially in the Middle East, amid the Syrian civil war, upheaval in Egypt and delicate nuclear talks with Iran.
"So far, no one has been eager to declare the patient dead," said Ghaith Al-Omari, executive director of the American Task Force on Palestine. "So far, everyone is talking about 'suspension,' but no one is talking about 'collapse,' simply because no one wants to be blamed for a collapse," he said.
NOW - OR 2021?
If Obama were to walk away now it likely would be several years before another U.S. president would throw much energy into Middle East peace. Efforts to end the deep-seated conflict are not seen as a winning issue, meaning that the next inhabitant of the White House would probably not tackle Israel and the Palestinians until he or she won a second four-year term - which would start in 2021.
Obama said on Friday the Palestinian move might mean that a "pause" would be needed in the talks. Though he called it one of a series of choices the two sides had made in recent weeks that had hurt chances of achieving peace, Obama offered hope the two sides might overcome their mutual mistrust.
The U.S. State Department said Kerry believes the peace effort is in a holding pattern, and it is up to Israel and the Palestinians to decide what to do next.
Khaled Elgindy, a fellow at the Brookings Institution's Saban Center for Middle East Policy and former adviser to the Palestinian negotiating team, questioned why a Fatah-Hamas accord should by definition be seen as a blow to the peace process.
Abbas has told Kerry the coalition with Hamas would renounce violence and recognize the state of Israel. On Saturday Abbas again signaled that he remains committed to the peace talks, saying that any unity government agreed with Hamas would recognize Israel.
And a unity government - if the deal held - would mean that, after years of division, a single entity was negotiating on behalf of all the Palestinians.
Plus, Elgindy noted, bitter foes in negotiations elsewhere have been willing to sit down together.
"If it's possible for the United States to talk to the Taliban and even have fruitful negotiations with Iran, then obviously it's not so insurmountable," he said.
(Additional reporting by Arshad Mohammed in Washington and Matt Spetalnick in Seoul; Editing by Frances Kerry)