JERUSALEM, June 6 (JTA) Three and a half months after fundamentalists swept to power in the Palestinian elections, the Islamicist Hamas and the secular Fatah are on the brink of a major showdown that could have far-reaching implications for Israel and the government’s plans for a unilateral withdrawal from Palestinian territory. Palestinian Authority President Mahmoud Abbas of Fatah seized the initiative in mid-May, by backing a call by Palestinian prisoners for a Palestinian state along the pre-1967 borders with Israel. In doing so, he forced Hamas to face up to the challenge of recognizing Israel or losing power. Abbas’ move also opened up the possibility of international pressure on Israel to negotiate on the basis of those borders. Abbas’ move could also clear the way for ending the Palestinians’ diplomatic isolation and freeing the flow of much-needed international funds. Those funds were blocked in the wake of the Hamas government’s refusal to recognize Israel, accept previous Israeli-Palestinian agreements and renounce terror. But while the Fatah leader’s initiative could break the diplomatic logjam, it is fraught with danger. Fighting between small groups of Hamas and Fatah militants on the streets of Gaza shows signs of intensifying. Both sides have mobilized large forces in Gaza and the West Bank, and some Palestinian observers are predicting civil war. Abbas’ call in late May for a national referendum on the prisoners’ document pushed the sides closer to the brink. Yet despite the mounting tension, the Fatah-Hamas confrontation could still play itself out politically. On Tuesday, Abbas was supposed to set a date for the referendum, but the Fatah executive deferred the deadline for agreement on the prisoners’ document for a “few days,” ostensibly to give the sides more time to negotiate. But the move was seen as an effort to step back from confrontation. Even if Abbas eventually does set a date for a referendum, the outcome could still be a nonviolent political solution. In one scenario, victory for Abbas in the referendum could bring Fatah back to power. A loss on the other hand, could see Hamas winning the presidency as well as maintaining control of Parliament and the government. Or, an 11th hour agreement between the two parties could see the formation of a national unity Fatah-Hamas government, with Abbas taking the lead in Palestinian diplomacy on the international stage. Abbas’ determination to go through with his initiative and the way he has gone about winning support for it has gained him considerable prestige on the Palestinian street. He spent weeks traveling the Middle East getting Arab leaders behind the initiative. He also met with Jack Wallace, the American consul in eastern Jerusalem, to coordinate the move with Washington. Often seen in the past as a weak, vacillating leader, afraid of confrontation, Abbas is now perceived by Palestinians as someone who could make a difference. A recent poll showed that if the referendum goes ahead, Abbas would win with more than 80 percent of the vote. Since he embarked on his initiative, his own rating has gone from 51 percent to 62 percent, and that of Fatah from 34 percent to 45 percent. Conversely, support for Hamas Prime Minister Ismail Haniyeh is down from 49 percent to 38 percent, and Hamas is down from 42 percent to 29 percent. The figures reflect Fatah’s newfound confidence on the street. The freezing of international aid is starting to bite, and many Palestinians blame the Hamas government for the non-payment of salaries and the lack of food and medicine. Heartened by the new mood, Fatah leaders have stopped their internal bickering and are rallying around Abbas. Fatah received an additional fillip last week when it won a sweeping 80 percent victory in student elections at the Gaza branch of Al-Quds University. As tension mounts, both Fatah and Hamas have been trying to show their strength. Fatah, which wields considerably more firepower in the West Bank, has put large forces on the streets in Jenin and other West Bank cities. Hamas has beefed up its street presence in Gaza, where it is believed to be stronger. Nevertheless, 10,000 mainly Fatah security personnel demonstrated in Gaza last Thursday against the Hamas government for its failure to pay their salaries. Commenting on the street clashes and the general mobilization on both sides, dovish Fatah leader Kadoura Fares declared that he could see “all the signs of civil war.” But Danny Rubinstein, a seasoned analyst who writes for Ha’aretz, does not believe a major armed confrontation is imminent. “The war of nerves will most likely continue for a while longer. Abbas enjoys broad national support, and the backing of Arab leaders,” he wrote. “Hamas enjoys popular support. It does not appear that the violence, so far limited to local incidents, is likely to slide into a full-blown civil war,” he wrote. Fatah leaders depict the prisoners’ document as an attempt to find the lowest common denominator for a Fatah-Hamas agreement that, once adopted, could get the wide international boycott of the Hamas government lifted. “The referendum constitutes a lifeline to the Hamas government to rescue it from international isolation, but they are finding it difficult to grab hold of it,” Yasser Abed Rabbo, a top PLO official, declared. For Haniyeh, the internal dilemma is that if he accepts the document, he could run afoul of the more radical Hamas leadership abroad; if he doesn’t, he could come in for criticism from the influential Hamas prisoners who signed it. Whether or not he reaches agreement with Abbas on the document, Haniyeh opposes the referendum idea in principle. He sees it as a ploy to overturn the result of the January election that he won. Some Hamas spokesmen say ominously that the movement will not allow a referendum to be held, others that they will merely boycott it. Either way the looming clash with Fatah, whether violent or political, could change the face of Palestinian politics. So far, Israeli leaders are studiously avoiding comment on what they describe as an internal Palestinian affair. But the implications for Israel could be huge. A clear-cut Hamas victory could accentuate questions about whom Israel would be handing back territory to after a unilateral withdrawal. An unequivocal Fatah victory could lead to pressure for a negotiated settlement. In the face of Palestinian developments, Prime Minister Ehud Olmert may have to draw on all his diplomatic skills to keep his unilateral withdrawal plan on the table.