A YEAR after last summer’s fighting and Gaza is still in ruins. Very little has been done to rebuild. Over 100,000 people are still homeless or living in decrepit bombed-out buildings. The economy has shrunk dramatically. At 43 percent, unemployment is the highest in the world.Gaza is a powder keg waiting to explode.But there are other, opposite forces at work, too. For one, strange as it may sound, Israel and the radical Islamist Hamas government in Gaza share profound common interests. Both would like to see a more stable Gaza – Hamas to reinforce its hold on power, Israel to avert yet another military showdown. And, as unlikely as it may seem now, neither would like to see the nightmare scenario of the ISIS offshoot Wilayat Sinai or Sinai Province moving from Sinai into Gaza, overpowering Hamas and establishing a base for attacks against Israel.A year after Operation Protective Edge in which over 2,100 Palestinians, 72 Israelis and a Thai worker died, Hamas finds itself under enormous pressure from an impoverished population that sees little hope for a better future, exacerbated by Israeli and Egyptian border restrictions on the flow of people and goods and heightened by the fear of ISIS, just a stone’s throw away in Sinai.Israel Security Agency (Shin Bet) Director Yoram Cohen speaks of Hamas’s “strategic distress.” And a growing number of Western, regional and Israeli players sense that a weakened Hamas might be ripe for a long-term hudna o r t ruce with Israel in return for accelerated and more ambitious reconstruction plans.For Prime Minister Benjamin Netanyahu, a five or 10-year cease-fire with Hamas would have the added advantage of creating a modicum of stability on the Palestinian front without having to move on the West Bank. Looking at it from a wider Israeli perspective, however, a Gaza deal could be a significant stepping stone on the way to a still distant two-state solution including the West Bank.On the ground there seems to be movement. Western diplomats have reportedly been carrying messages between Hamas and Israel. Some are even talking about a new “Gaza First” concept. They argue that if a full-scale Israeli-Palestinian peace is to be achieved, Hamas, entrenched in Gaza, cannot be ignored.And that instead of trying to strengthen the Ramallah-based Palestinian Authority at Hamas’s expense, Israel and the US should work for a more inclusive Palestinian polity, which would be well served by an extended cease-fire deal with Hamas.There have also been significant regional moves toward accommodation with Hamas. Soon after he was crowned in January, Saudi Arabia’s King Salman stepped up efforts to create a wide Sunni front against Shi’ite Iran. One of the central ideas was cutting off the Hamas-Tehran connection, partly through a Saudi-inspired reconciliation between Egypt and Hamas. Salman also turned to Turkey and initiated secret talks with Israel, seen as a silent partner. Clearly, an Israel-Hamas truce would serve the new Saudi regional vision.Qatar, already deeply involved in Gaza reconstruction, has also been a significant regional actor in this regard, playing a quiet mediating role. Off the record, Israeli and Hamas officials confirm the feelers, but insist no breakthrough is imminent.Publicly, Hamas says Israel and Egypt have recently become “more realistic.”Israeli public statements have been more ambivalent. In late May, Israel’s President Reuven Rivlin hinted that something might be afoot when he declared that he did not rule out negotiations with Hamas. In late June, however, Defense Minister Moshe Yaalon flatly denied that there was anything to the rumored hudna for reconstruction talk.The dire economic situation that seems to be propelling Hamas toward a deal with Israel was underlined in complementary reports by the World Bank and the International Monetary Fund in May. According to the World Bank, the Gaza economy is on the verge of collapse. Because of the periodic wars and the border restrictions, the GDP is four times less than it would otherwise have been. The Israeli naval blockade alone has “shaved” an estimated 50 percent off the GDP, it says.The IMF report notes that whereas real GDP growth in the West Bank in 2014 was an impressive 5 percent, in Gaza the economy contracted by 15 percent, leaving around 60 percent of young people out of work. According to a poll in June by the Palestinian Center for Policy and Survey Research, 50 percent of Gazans would consider emigration if it were possible Hamas’s economic position became even more untenable with Egypt’s smashing of the smuggling tunnels between Gaza and Sinai. Duty on smuggled goods had been a major source of revenue. Without it, Hamas has struggled to pay its 40,000 employees, civil servants and militia.SOME OF the reconstruction that is taking place is directly controlled by the Qataris, which gives them leverage as mediators. They are building 3,600 highrise apartments and two four-lane highways.Israel is also a key player in what reconstruction there is. It sends in around 800 trucks a day carrying a wide array of goods, including 450 tons of building materials.The Palestinians say they need seven times that amount. Israel counters that much of it is being diverted to rebuild Hamas attack tunnels. A truce for reconstruction deal, including supervision of incoming materials, could appreciably alter the numbers.In late June, adding to the pressure on Hamas to make a significant diplomatic move, Wilayat Sinai issued a video warning of plans to capture Gaza and institute its version of shari’a law. Within days that was followed by a major assault by the radical Islamist group on Egyptian forces in Sinai. Israel accused Hamas’s military wing of aiding and abetting the ISIS affiliate.But Hamas’s political wing denied any connection with Wilayat Sinai, insisting that, on the contrary, it sided with Egypt.It seems there are two approaches within Hamas – military hard-liners who still harbor hopes of restoring Muslim Brotherhood (of which Hamas is the Palestinian offshoot) rule in Egypt and see Wilayat Sinai as a vehicle, and political leaders who look to reconciliation with Egypt as a means toward getting the key Rafah border crossing point reopened on a permanent basis.Egypt and Hamas have already begun moving closer. In late May, as part of Riyadh’s Sunni front initiative, Saudi Foreign Minister Adel al Jubeir visited Cairo where he outlined a reconciliation plan.A week later, an Egyptian appeals court overturned a ruling defining Hamas as a terrorist organization. And the following week, for the first time in three months, Egypt opened the Rafah border crossing and kept it open for a full seven days. In return, Hamas promised no tunneling operations against Egypt in Sinai and no criticism of Cairo in the Hamas-controlled Gaza media.As for Israel and Hamas, accelerated diplomatic toing and froing over the past few months between Gaza, Jerusalem, Riyadh, Cairo and Doha fueled speculation that a long-term truce for reconstruction deal may be in the works. The central idea being floated is that in return for a five- to 10-year hudna, Israel and the international community would take steps to facilitate massive reconstruction and reinvigorate the flagging Gaza economy.Israel would ease or lift its naval blockade and allow port facilities in Cyprus, where European inspectors would examine cargoes to prevent weapons smuggling.Although Cypriot President Nicos Anastasiades was in Israel in mid-June, it is not clear to what extent he or Netanyahu are interested in developing the Larnaca port facilities scheme. Nor is it clear to what extent Israel would be ready to trust weapons’ inspection to the Europeans.Israel could help build a much needed desalination plant in Gaza.Unemployment could be significantly eased through major reconstruction projects and by allowing tens of thousands of Gazans to work in Israel.Similar proposals came up in the immediate aftermath of Operation Protective Edge. Then, however, the formula was reconstruction for demilitarization. It is not clear how much of this Israel would be prepared to implement in return for the lesser truce quid pro quo.Moreover, in the aftermath of Operation Protective Edge, the idea was that the Palestinian Authority, together with a special European force (the European Border Assistance Mission or EUBAM), would man the Palestinian side of the opened border crossing points between Gaza and Egypt, and Gaza and Israel. The PA was also supposed to take the lead in disbursing reconstruction funds. None of this happened because PA President Mahmoud Abbas refused to send his men in unless Hamas disarmed. That led to complete deadlock.The strategic question for Israel and the international community now is whether to stick with the original formula – deadlocked because of Hamas’s unshakable refusal to disarm – or to go for a lesser, but still highly significant, long-term hudna for reconstruction deal, circumventing the PA and dealing with Hamas.The money for reconstruction was pledged at a donor conference in Cairo last October. The 22 countries in attendance promised just over $5 billion for the Palestinians, $3.5 billion of which was earmarked for rebuilding Gaza. East European countries like Romania and Hungary pledged small amounts ranging from $50,000 to $160,000 while the big pledges came, inter alia, from Norway $145 million, Kuwait $200 million, Turkey $200 million, US $277 million, EU $348 million, Saudi Arabia $500 million and Qatar $1 billion.The trouble is that according to the World Bank, by mid-May only $967 million or 27.6 percent of the money promised had actually come through. The two biggest donors, Saudi Arabia and Qatar, had transferred only 10 percent of their pledges.A long-term truce deal would almost certainly accelerate the funding.But will Israel and Hamas, and all the other key players, find a way to make it happen?