Palestine's future is in our hands

Hamas must be required to make a gesture; this should coincide with a longer-term economic package a

Out of sight of some, and out of mind of many, a fledgling nation is dying. Palestine - a grandiose term for two strips of land surrounded by a more powerful state with which it has long been at war - is on the brink of collapse. According to the international community's special envoy, James Wolfensohn, the Palestinian Authority (PA) has roughly two weeks' money left. That was why on 27 February the European Union, with Washington's guarded consent, agreed a temporary financial package of E120m (£82m) to tide it over. Problem briefly deferred, but nowhere near solved.

Until a month ago, the major powers conspired in keeping the Palestinians alive - just. In recent years, the US and EU provided similar levels of funding (in 2005 a combined total of £600m) to the PA for food and humanitarian aid, infrastructure and other projects. All of it has been vital, but even with this help, the plight of Palestinians has been stark. According to a UK Treasury report, compiled for G8 finance ministers, GDP per capita is 30 per cent below the levels of 1999, and one-thirteenth of Israeli levels. Unemployment is running at 25 per cent, while poverty rates are rising steadily, with nearly a half of all Palestinians living below the official poverty line of $2 a day. This is expected to rise to nearly two- thirds of the population by 2008.

These hideous imbalances sharpened with the start of the second Palestinian intifada in 2000. When relations were at their calmest, a third of Palestinian workers were employed inside Israel, and Israel received the biggest share of Palestinian exports. This has all but collapsed, a separation enshrined by Ariel Sharon in the construction of the wall.

The decisive victory of Hamas in the Palestinian elections on 25 January signalled a point of no return. The Israelis insist they will have no contact with the incoming government unless Hamas revokes its founding charter, by renouncing violence and recognising Israel's right to exist. They are supported in this by the members of the Quartet - the EU, US, UN and Russia - with varying degrees of firmness. Furthermore, the Palestinian president, Mahmoud Abbas, has threatened to quit if progress is not made. It should be noted that the number of actual terrorist attacks has decreased recently. Furthermore, western states have long worked with Middle Eastern governments that have not recognised Israel.

Hamas faces an urgent predicament. No shift: no money. Many Palestinians voted for change as much for the pledge of a cleaner administration as for a hardening of policy towards Israel. Yet Iran provides an example, and not the only one, of governments finding popular support in stridency. This is a time for intelligent diplomacy, something that has been in short supply in recent years. Hamas must be required to make a gesture; this should coincide with a longer-term economic package, and thereafter by the beginnings of a political dialogue with Israel. Given the grievances, it will not be easy for either side to move, but move they must.

A sense of injustice and a lack of opportunities provide a key link (if not the only link) with terrorism. In the coming months the very survival of the Palestinian state will be determined. It is in the self-interest even of its detractors, Israel in particular, to help build that state, not destroy it.

Wanted: inspiration

The schooling of our children is far too important to be defined through one politician's survival. The battle over the government's Education and Inspections Bill has been dispiritingly narrow, in its focus and in the motivations of the competing sides. It matters less whether the Prime Minister gets the legislation through on the back of Tory support, and in the face of Labour rebellion, than what the planned changes will do for the next generation.

That is why, in our special issue on education this week, we have sought to set out the broader issues. As Peter Wilby argues in his compelling introductory essay (p22), the bill marks the defining moment in a Labour government's shift away from education as communal culture to education as instrument of individual ambition. The role of local education authorities, the amount of autonomy to be enjoyed by new "trust" or "foundation" schools, and the strength of the admissions code are the details. What they constitute, and what really matters, is the final departure from a comprehensive ideal that has been fraying for some years.

Tony Blair and a small, hardened circle around him have long been convinced that the only way of saving public services and justifying the continued rates of investment in them is to appeal to the notions of consumer choice they now believe are immutable. A discussion of the best school for one's children would be little different from the choice of holiday or supermarket, accompanied by a light regulatory framework. The PM has similarly convinced himself that, with the exception of the odd inspirational headteacher, education professionals cannot be relied upon without the intervention of parents and commercial organisations.

These arguments are bigger than the immediate politics. But as the bill is passionately debated inside and outside parliament this spring we, too, will have a point or two to make about what it means for Blair's future.