dreadnought,
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IMHO, All he did was legitimize a known terrorist organization that will not change no matter the deal. It was foolish to give them any press or air time.
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i'm not sure how he "legitimized" hamas- it's not as if all the governments in the world are flocking to recognize the group.
anyhow, as far as terror groups go, hamas is not in hezbollah or al-qaeda territory- i think these people can
to some degree be influenced. as a sign of this, notice how al-qaeda lambasts hamas whenever it gets the chance.
israel has two options at this point. the first is to negotiate with hamas. the second is to destroy hamas altogether. the first is distasteful, yes.
but the second would probably mean a very, very bloody incursion which will probably kill off any chances for a peace deal and be inconclusive. it will probably also mean that the relatively moderate abbas will get kicked out, and fatah either pulling in with hamas or losing all of its already low "street cred".