There's nothing all Israelis - no matter what their political inclinations - would like better than to receive a genuine message of reconciliation and accommodation from Fatah's sixth General Assembly, which opened in Bethlehem yesterday. Nearly 16 years after the advent of the Oslo process and 20 years since the last Fatah convention, nothing would gratify us more than unambiguous indications that peaceful reconciliation is indeed possible and that we have true partners with whom to negotiate in good faith. But thus far, the signals from Bethlehem are not the sort to bolster hope. Fatah - widely seen as the more moderate force in Palestinian society, certainly when compared to Hamas - is hardly in good shape. Its deep-seated malaise may indeed be the underlying reason for PA President Mahmoud Abbas's decision to call the gathering in the first place. Fatah has not only lost Gaza to Hamas, but fears losing further support in the West Bank. Unfortunately Fatah's make-or-break rivalry with Hamas is underpinning the more radical elements within it rather than inspiring ideals of coexistence. In the competition for the hearts and minds of ordinary Palestinians - already indoctrinated by hostile, anti-Israeli propaganda in the classrooms, media and mosques - readiness for compromise isn't regarded as an attractive selling point. The fact that Gaza is cut off - its Islamist government refused to cooperate by allowing Gaza-resident delegates to travel freely and participate in the Bethlehem assembly - is Fatah's major and glaring handicap. It cannot speak for the entire Palestinian constituency, and is helpless as Hamas moves to gradually alter Gaza's character and mind-set via the Islamization of daily life. Thus hobbled, Fatah's aging leadership - saddled with a history of corruption - seeks to play simultaneously to all galleries. For foreign spectators, it offers resolutions that ostensibly relinquish "armed struggle" (code for terrorism). Yet domestic audiences are sometimes simultaneously exhorted to continue the "resistance" over the settlements, security fence and Jerusalem. In other words, while appearing outwardly temperate, Fatah often engages in semantic games. Fatah members adept at interpreting such nuances are liable to exit this week's conference understanding that they have received an updated carte blanche to attack Israelis. The hero's reception given to Khaled Abu-Usba - one of the perpetrators of the March 11, 1978 bus massacre in which 35 Israelis were murdered - speaks volumes. It's against this backdrop that MK Avi Dichter (Kadima) - a former Shin-Bet head and public security minister - has warned that "this convention might spur a third intifada." WHILE THE PA accepted Israel as a de facto entity, the PLO's central Fatah component did not. Hence the convention's expected unequivocal rejection of recognizing Israel as a Jewish state. Dropping insistence on the "right of return" is equally out of the question. In that context, the determination of Israeli Arab MKs like Ahmed Tibi and Taleb a-Sanaa to participate in the event should more than raise eyebrows. The surreal nature of Fatah's deliberations is embodied by the inordinate attention accorded Farouk Kaddoumi's assertions that Abbas's predecessor Yasser Arafat did not die a natural death but was, rather, assassinated via collusion between Abbas and former prime minister Ariel Sharon. That so much energy would be squandered on a canard - at the expense of real problems and hardships - is profoundly depressing. Where the culture of mendacity reigns, the opportunity for mutual trust cannot flourish. Muhammad Dahlan, one of Arafat's foremost loyalists and a man once perceived as an exemplar of relative moderation, lauded Arafat's duplicity on the most sensitive of issues in a recent interview broadcast from Ramallah on PATV. According to an approving Dahlan, Arafat condemned terror attacks "during daytime, but did the honorable thing at night." By "the honorable thing," for those not schooled in these nuances, Dahlan meant fostering terrorism against Israel. Israel's government and the new American administration are seeking to create a climate for substantive progress in Israeli-Palestinian negotiations. The Fatah conference represents an opportunity for Abbas and his colleagues to assure the watching world, and emphasize to their own constituency, that their goal is real peace - that they are committed to the path of viable reconciliation with Israel. Sadly and counterproductively for all sides, the indications thus far are quite different.