Street protests last month on both the West Bank and the Gaza Strip urging a reconciliation between the rival Palestinian political factions attracted little attention at the time.

They seemed to pale in comparison to the tumult occasioned by popular revolts throughout much of the Middle East. Yet these forces in tandem have yielded an unexpected development, a fledgling alliance between the moderate and pro-Western Fatah party, which governs the West Bank, and the Islamist Hamas, which controls Gaza.

The pair have pledged to form a caretaker unity government to prepare the way for presidential and parliamentary elections within a year.

While several tricky issues, such as the selection of a mutually acceptable prime minister, remain, this rapprochement is undoubtedly a welcome step.

Palestinian unification is an essential element for the forging of a peace deal with Israel, as well as international acknowledgment of Palestinian statehood, possibly through United Nations recognition at a session scheduled for September.

Anything that embraces only Mahmoud Abbas's Fatah is bound to lack credibility and fly in the face of reality. As much was recognised by Egypt's new rulers, who brokered secret talks between the pair.

But that is not how Israel and, to a lesser degree, the United States have reacted. They have chosen to focus on Hamas' refusal to renounce violence and recognise Israel's right to exist, and, most recently, its condemnation of the killing of Osama bin Laden.

According to the Israeli Prime Minister, Benjamin Netanyahu, "the Palestinian Authority [dominated by Mr Abbas's Fatah] must choose either peace with Israel or peace with Hamas. There is no possibility of peace with both".

That is unnecessarily strident. Clearly, much should now depend on to what degree Hamas is prepared to moderate its domestic and international policies. That is not fully known at this stage. But its agreement to this deal suggests it is ready to end its intransigence.

Certainly, according to Mr Abbas, it has agreed that it will have no representatives in the interim unity government, which will involve people who are "independent, technocrats, not affiliated with any factions, neither Fatah nor Hamas".

That may all change with the elections, however. It should not be forgotten that Hamas won the last Palestinian legislative elections in 2006, the precursor to a civil war that led to Fatah's ousting from Gaza.

It could well be that the government that emerges from new elections has a strong Hamas strain. If so, there should be no surprise in the West. Governments that are more radical in character will surely be the product of most of the popular revolts in the Middle East.

If this is the democratic will, it need not be liked but it must be acknowledged and addressed through diplomacy.

Many members of both the Democratic and Republican parties in the US Congress are still grappling with this. They talk now of withdrawing annual aid of US$400 million if Hamas is included in the Palestinian government, and have urged Mr Abbas to think again.

The Obama Administration, for its part, says aid will keep flowing to the Palestinian Authority, but this will be reassessed as the policies of the new leadership emerge.

Any attempt to continue to keep Hamas on the outer would be regressive. It was elected and continues to enjoy the support of many Palestinians. At some time, it will have to become part of negotiations for peace and the formation of a Palestinian state.

If it moderates its policies and actions, as implied by this coming together with Fatah, a real chance exists for progress. Palestinian unity should be regarded an an opportunity, not an obstacle.