The intense diplomatic activity in the wake of the Hamas takeover in Gaza may yield absolutely nothing unless it focuses squarely on the issue of Palestinian sovereignty. Now is the time to reexamine the working assumption guiding negotiations since Oslo - that statehood is the ultimate outcome of the resolution of the conflict, rather than a vehicle for its achievement. The recent flurry of initiatives (including the lifting of the boycott on the Palestinian Authority, the appointment of Tony Blair as the Quartet emissary and the major Bush policy statement last week) has concentrated primarily on containing Hamas influence, fortifying the new Palestinian Authority government and preventing an even greater humanitarian calamity. Some attention is currently being given to defining the framework for a renewal of talks (the Arab League Initiative) and agreeing on a mechanism for their resumption (convening an international or regional conference). But not enough emphasis is being placed on perhaps the most pressing objective: the creation of an independent Palestine alongside Israel. For far too long, the PA has been treated as a state-actor, when in fact it has no standing as a sovereign state and lacks state capabilities. Until this past month, successive PA governments, endowed with some internal legitimacy via the ballot box, were charged with multiple responsibilities, but were not accorded any official authority. This anomaly - almost without historical precedent - has been further complicated now that the Gaza-West Bank divide has yielded a situation of split rule. The renegade Hamas government controls Gaza, the Fatah-dominated government controls the PA... and the Israeli government, directly and indirectly, controls the political future of both. ALL THOSE involved in the conflict have a vested interest in extricating themselves from this impossible conundrum. Israel has succeeded, to its detriment, in creating the illusion of PA responsibility without fostering the conditions or enabling the development of tools for its actualization. The policy of Israeli-Palestinian separation but no formal transfer of power, significantly advanced by Ariel Sharon and effectively extended on the ground by Ehud Olmert, can no longer support a modicum of safety or stability. As the Gaza disengagement experience has demonstrated, territorial withdrawal unaccompanied by political agreements leads to a power vacuum that fuels anarchy and encourages extremism. Israel cannot roll back its Gaza blunder; it must ensure that it does not repeat the same mistake twice. The vast majority of Israelis, who realize the heavy liabilities ingrained in continued overrule over the territories captured in 1967 but are afraid to hand over power to the Palestinians, are at a critical decision-making crossroads. Every day that no other sovereign entity exists beyond the Green Line means that Israel is responsible for what takes place there, even when these events are not of its own making. If it wishes to relieve itself of this albatross and regain its international legitimacy, it must be prepared to forfeit control and relinquish any claim to sovereignty. The PA and its leadership - especially Mahmoud Abbas and Salaam Fayad - also need to demonstrate progress toward statehood, not only to overcome the duality that has prevailed since the Hamas secession, but also to assert their political primacy in the West Bank. This cannot be achieved unless the asymmetry that entraps them in a situation of heading a government without state powers and capabilities is rectified. If the PA disbands because it is unable to meet expectations under these admittedly well-nigh-impossible conditions, the already precarious situation of today will be totally undone. But the PA government cannot prevail if it possesses only the accoutrements of statehood and precious few of its powers. The question of sovereignty, therefore, is not only central to a durable Palestinian-Israeli accord; it is actually a vital step in its attainment. Any attempt to prolong negotiations, secure interim measures or sidestep the sovereignty issue is a sure prescription for further deterioration, with broad regional consequences. Time, while buttressing extremism, favors neither of the sides to the conflict. The fashionable - but hopelessly erroneous - propensity in certain quarters to classify the PA as yet another failed state is equally misguided. The institutional weakness of the PA administrative infrastructure, systematically enfeebled both by Israel and by PA mismanagement and internal strife, does not offer proof of state incapacity. How can the fettered PA be characterized as a collapsing state if it never was a state at all? The puzzle posed by this fundamental anomaly will continue to hound any effort to bring about an end to the conflict unless confronted openly. Palestinian sovereignty should be the next, not the last, phase in Israeli-Palestinian reconciliation. Without it no sense of human security for both communities can be fostered and entrenched. Negotiations on the permanent boundaries of Palestine and Israel, and in their wake on all outstanding items on the final-status agenda, may not solve all the problems of authority, legitimacy, responsibility and control that plague the conflict at this juncture. What is becoming much clearer, however, is that without an independent Palestine alongside Israel, none of these issues can be effectively tackled, let alone be resolved.