Israel's campaign to isolate the Palestinian Authority unity government sworn in last Saturday is as misplaced as it is predictable. Instead of hearing the voices now emanating from Ramallah and Gaza and exploring their nuances, official Israel appears bent on maintaining a full diplomatic and economic boycott of the new PA coalition. Not only is this strategy a losing proposition (there are signs of a partial, if not a full, lifting of the embargo in Washington as well as in Europe), it also goes against Israel's most essential interests. To capitalize on the very real strategic opportunities currently available in the region, Israel cannot afford to close the door on the PA and its new leadership. The Hamas victory in the Palestinian Legislative Council elections of January 2006, however explicable in retrospect, came as a shock not only to Israel and the international community, but also to the PLO establishment. The reaction to the rise via the ballot box of an extremist group explicitly dedicated to Israel's destruction was swift. Israel froze Palestinian assets and the Quartet imposed sanctions on the Ismail Haniyeh government. The international community set three conditions for their removal: cessation of terrorism, acceptance of previous agreements and recognition of Israel. The siege on the PA was designed to apply massive pressure - both internally and externally - to topple the Hamas government. It sought not only to ostracize the militant coalition, but to simultaneously bolster Chairman Mahmoud Abbas and the PLO leadership by wrapping them in a cloak of international respectability with a view to augmenting their domestic appeal. The imposition of broad sanctions over the past 13 months largely succeeded; these, however, failed to achieve their declared objectives. The lack of differentiation between the Palestinian people and its elected government meant that economic conditions, especially in Gaza, deteriorated dramatically. The humanitarian distress, far from increasing antipathy toward the Hamas leadership, actually increased Palestinian solidarity in the face of mounting collective misery. THE ATTEMPT to deepen the breach between Hamas and the PLO fuelled clashes between armed militants, which created an atmosphere of lawlessness, culminating in a near civil war. The ensuing chaos proved to be a catalyst in generating the call for a national unity government. Israel too, despite the international backing it received, could not lay claim to greater security in the wake of the blockade. The Kassam rocket attacks from Gaza continued unabated until recently, while Islamic extremists amassed munitions at an alarming pace. One should not be blinded by the relative calm of the past few months: The present cease-fire is closely linked to the quest for an internal accord. The new PA government is an intricate exercise in cohabitation. While it may not have altered Hamas predominance, it has moved its leadership on the ground to an acceptance of the international obligations of the PLO (and hence to indirect acknowledgement of Israel). Fatah and independent factions have (perhaps somewhat reluctantly) entered into a coalition with Hamas; they have also gained a measure of maneuverability as a result. It is thoroughly disingenuous, if not tragically simplistic, to assume that the Palestinian political terrain remains unchanged now that the Mecca agreement has been concretized. Despite the dual messages emitted by the new government, Abbas now has both the authority and the mandate to pursue negotiations and to bring any accords to a popular referendum. The international community, cognizant of this shift, has expressed its willingness to enter discussions with at least some of the new ministers. Israel, which has claimed for too long that the PA chairman is weak and unrepresentative, would be negligent not to follow a similar course. Indeed, the formation of the unity government must be examined within the context of an intriguing geo-strategic realignment in the region. The centrality of Saudi Arabia in nurturing the internal Palestinian agreement is part of an overall move to cement a broad moderate Arab alliance committed to the reaffirmation of the Arab League initiative in Riyadh this coming week. This framework, so crucial for Israel's long-term safety, has aroused considerable interest in Israeli circles, as it guarantees an end to the Arab-Israel conflict and normalization of relations between Israel and its neighbors. It cannot, however, be detached from its substantive core: the conclusion of Israeli-Palestinian negotiations on a viable and just two-state solution. The major elements of a package that can jump-start this process are now in place. The release of Gilad Schalit and a prisoner exchange, coupled with the lifting of the economic as well as the diplomatic embargo on the Palestinian people, can add the missing ingredients. But all these complex moves will lead to naught unless accompanied by a clear indication of Israeli willingness to commence negotiations now. The next step is up to Israel. It can fool itself into believing that it can adapt the Arab League proposals while bypassing the PA government, or it can courageously reengage its principals. A bold Israeli outreach at this critical and extraordinarily sensitive juncture involves minimal risks; it is also the best way to ensure Israel's interests in the long run. Even an embattled prime minister at the head of a fractured coalition cannot let this chance slip away.