Leading article: A storm of violence that we have done little to quell

The Palestinian territories could be heading for disaster. Eight people were killed and 60 wounded in the Gaza Strip over the weekend during gun battles between Palestinian factions. Government offices were trashed in the West Bank. Fighting continued yesterday, with a firefight at a hospital in Gaza City. There are fears this unrest could lead to a total breakdown of law and order, perhaps even civil war.

On the surface, this is a power struggle between Fatah and Hamas, the two most powerful political bodies in the Palestinian territories. But the situation is actually more complicated - and the outside world must accept its share of responsibility for the fires that are now raging across the West Bank and Gaza.

For most of this year, the international community and Israel have been exerting a financial squeeze on the Palestinian Authority, holding back the aid that it requires to function until Hamas, which has control of the Palestinian government, recognises the state of Israel and renounces violence. Fatah, which was thrown into a state of turmoil itself when Hamas unexpectedly won the Palestinian elections in January, has sought to exploit its opponents' weakness. On Sunday a Hamas militia put down a protest, supposedly over unpaid wages, by Fatah-supporting security officers. This was the flash point for the battle - and many more are expected in the weeks to come.

It is true that there would be a rivalry between Hamas and Fatah under any circumstances. But the strangulation of Palestinian political and economic life has made the situation much more volatile. Israel and the West have embarked on a most unfortunate road. The unstated objective of their present tactics is to precipitate the fall of Hamas. Yet not only is this likely to prove ineffective (a poll of Palestinians last month showed that Hamas' popularity is holding up well), it is highly dangerous. The sanctions are merely re-enforcing the impression among many Palestinians that Israel and the outside world are intent on keeping them in misery.

Whether the international community likes it or not, Hamas has democratic legitimacy among Palestinians. The outside world's decision to cut off aid has been a mistake. The West cannot demand democracy in the Middle East and then reject what it throws up. The international community must engage with Hamas. This need not mean a complete normalisation of relations. But a good first step would be to bring back the funding of the PA under certain conditions, short of demanding an unambiguous recognition of Israel by Hamas. Israel should also be forced to end its brutal blockade of Gaza. If the US refuses to make such demands, the UN and the EU have a responsibility to take the lead. If all this boosts Hamas' fortunes it is a price worth paying for the improvement in the lives of ordinary Palestinians.

Hamas must make concessions too, of course. The group's leadership, hiding in Syria for fear of Israeli assassination, has been irresponsibly intransigent in refusing to form a unity government with the Palestinian President, Mahmoud Abbas - a "cohabitation" that has the backing of most Palestinian people.

There are some inescapable realities here. Israel and the rest of the world will, in the end, have to deal with Hamas if there is to be progress in the search for a lasting peace settlement. There will also need to be some form of political agreement between Hamas and Fatah if the Palestinian territories are to achieve the goal of statehood. The tragedy is that, at present, both sides seem more keen on fighting each other than advancing the interests of the long-suffering Palestinian people. Not for the first time, violence seems to be triumphing over reason in the Middle East.