He's the new face of Hamas - a well-spoken intellectual who says he wants a Palestinian state alongside Israel, not instead of it. Local Affairs Minister Mohammed Barghouti has like-minded company in the new Palestinian Authority unity government. In hopes of breaking an international boycott, Hamas has filled its Cabinet seats with professionals and pragmatists, keeping its ideologues at home. "The world should use the positive signs, not push Palestinians to the wall," said Barghouti, pleading for an end to the boycott. Yet Hamas is still close to the virulently anti-Israel Iran, keeps smuggling rifles and rockets into the Gaza Strip and threatens a third Palestinian uprising if diplomacy fails to bring statehood. Since Hamas and the moderate Fatah Party formed a coalition government last month, the world has been trying to figure out whether Hamas's conflicting signals constitute true ideological transformation or merely a ploy to push a hidden, radical agenda. Hanging on to both options - militancy and moderation - allows Hamas to help prevent a split between pragmatists and hard-liners and put off tough decisions. "We are now at the stage where Hamas does want to deal, but it has to preserve what it sees as its credibility, also among the broader Palestinian public," said Mouin Rabbani of the International Crisis Group, a private think tank. Palestinians contend the West is missing a huge opening for Mideast peace by continuing to boycott Hamas. But Israelis warn against falling for Hamas's smooth talk. Barghouti, one of Hamas's most polished advocates and at 38 the youngest Palestinian Authority Cabinet minister, says his people understand today's realities: that Israel is here to stay and that progress will be achieved through politics, not war. Barghouti, a second cousin of jailed Fatah leader Marwan Barghouti, challenged the West's main argument for maintaining the boycott: that Hamas has failed to renounce violence and recognize Israel's right to exist. By calling for a Palestinian state on the lands Israel occupied in the 1967 Mideast War, "that means there is another state on the other side," he said, referring to Israel. The government's support for expanding a truce from Gaza to the West Bank, he argued, trumps its platform affirming Palestinians' right to "resist" - widely seen as code for violent attacks on Israel. Critics point to that part of the platform as proof that Hamas has not changed. "No one among the Palestinians is calling for the elimination of Israel," said Barghouti, a former Hamas student leader jailed repeatedly by Israel. "All the Palestinian people want is a state in the 1967 borders." Palestinian Authority Foreign Minister Ziad Abu Amr, an independent trying to sell the new government to the world, said Hamas underwent a dramatic ideological shift as a ruling party. "One year ago, the movement would never have accepted a Palestinian state within the 1967 borders," Abu Amr said last week. Israel warns that Hamas' softer tones are just a tactical ploy to stay in power, after a year of international sanctions. "There has been no change whatsoever in the ideology," said Boaz Ganor, an Israeli counterterrorism expert. Hamas hardliner Mahmoud Zahar seemed to confirm Israel's claim. "The current government program will last at most three years, but our program is to liberate Palestine, all of Palestine, in what we call the gradual solution," the former Hamas foreign minister said in remarks recently carried on a Web site linked to Hamas. Israel warns that Hamas is exploiting a relative lull to smuggle anti-tank missiles, rockets and explosives into Gaza, through underground tunnels from Egypt. Palestinian analysts say other factions, including Fatah, smuggle weapons and that militants are hoarding for another possible round of factional fighting, not for use against Israel. Yet Israel's military is so worried about the arms buildup that it is preparing for a major invasion of Gaza, on par with a devastating 2002 offensive against terrorists in the West Bank. Prime Minister Ehud Olmert won't give the approval for now, but one deadly rocket attack could change his mind. In another worrisome sign, Israel announced Tuesday it had arrested 19 Hamas members who planned a car bombing in Tel Aviv over the Passover holiday. Hamas's last suicide attack was in 2004. For now, international sanctions have remained in place because of Hamas's failure to meet three international conditions: explicit recognition of Israel, renunciation of violence and acceptance of previous peace deals. The European Union and the US decided to deal only with non-Hamas members of the government, and only Norway has recognized the coalition. Foreign leaders say they'll judge the new government by its actions, including putting a stop to rocket fire from Gaza and releasing an Israeli soldier seized by Hamas-allied terrorists 10 months ago. Barghouti hinted that if rebuffed, Hamas might fall back on its militant ideology. "We have shown great flexibility in Hamas," he said. "Hamas has two options. If it is not encouraged to go ahead with the political era, then we will have the other option."