The Fatah-Hamas feud has descended to bloody battles, mostly in the Gaza Strip. There the Islamic movement is stronger.

Abbas' nationalist Fatah Party has been standing with its back to the wall. It has more troops than Hamas does, but Hamas' men are much better equipped, Israeli analysts noted.

The head of the Shabak security service, Yuval Diskin, Sunday told the Cabinet of "excitement" among Fatah's ranks that, for the first time in months, "showed their muscle." Hamas is troubled by the fact Fatah hasn't cracked, he added.

The confrontation is not over. Since talks on forming a national unity government failed, Abbas advocated early elections to the presidency and the Legislative Council. Hamas opposes it and if Abbas presses, Hamas might send its men to the streets. Diskin said the situation, especially in Gaza, is "chaotic" and if elections were held now, Fatah's chances of winning are -- nil.

The United States and Israel are trying to help Abbas. Egypt, reportedly concerned over radical Islamist influence at its doorstep, is pitching in. Israel's problem is, "How to strengthen (Abu Mazen) without turning him into a collaborator," said Yohanan Tzoreff, a senior research fellow at the International Policy Institute for Counter-Terrorism near Tel Aviv.

The answer is a series of steps designed to show that through negotiations, tough as they might be, the Palestinians will gain more than through the use of force.

Hence the government decided on steps that Olmert said are, "Likely to contribute to improving the atmosphere, strengthening moderate forces and distancing the civilian population from the cycle of terrorism."

International sanctions, including a halt on aid, have contributed to a 10 to 15 percent drop in national income "which is huge in any country," accounting to the World Bank director in the West Bank and Gaza, David Craig.

But while the Hamas-led Palestinian government is cash strapped, and the United States, Egypt and Israel foiled Hamas' efforts to bring in cash, increased international humanitarian aid has been channeled through Abbas' office and directly to needy individuals. Israel is going to give Abbas some $100 million. It is Palestinian money, revenues from sales tax and other taxes Israel collected on the PA's behalf, and froze. Now President Abbas, not the Hamas led government, will use that money.

Olmert told the Cabinet it will be used for humanitarian aid, but a senior Israeli official told United Press International he believed it will be used to pay security forces loyal to the president to prevent a defection to Hamas.

Israel is ready to let the Palestinian Army's Badr Brigade move from Jordan to Gaza, and strengthen the pro-Fatah forces. However that brigade is considered weak.

The fate of the thousands of security prisoners in Israel's jails is uppermost in Palestinian minds. Six months ago Olmert was ready to make a goodwill gesture and release prisoners who killed Israelis. The kidnapping of Cpl. Gilad Shalit, in June, halted the move as Olmert refused to release prisoners before Shalit is repatriated.

Abbas asked Olmert to stick to the tradition of releasing prisoners before Muslim holidays -- Eid al-Adha is next week - and Olmert is having second thoughts. Releasing security prisoners now would be seen as a something Abbas won, through negotiations with Israel, while a prisoner swap would be seen as a Hamas victory, proof that the kidnapping got Israel to free prisoners.

Olmert sounded out Vice Premier Shimon Peres, Defense Minister Amir Peretz and former Defense Minister and now Infrastructure Minister Binyamin Ben-Eliezer. All seemed to support a gesture like that would strengthen Abbas.

The government has to prepare its own public opinion for the change of policy so reporters were told of the three ministers' opinion. Officials hinted Israel might free 30 prisoners but a well placed official said it is a trial balloon. The real number will be around 100 people, he added. Jailed Fatah leader Marwan Barghouti will not be freed.

If Abbas holds early elections Barghouti might be Fatah's candidate for prime minister. He would win more votes while he is in jail than once he is out, the source added.

The Israelis intend to ease movement trough 59 of their 400 roadblocks in the West Bank. They will start with checking only some of the passing vehicles rather than all of them and at a later stage remove some barriers.

Those obstacles have divided the West Bank into 10 segments, channeling people through permanently manned checkpoints where, in most cases, one needs a permit to cross, the United Nations' reported. That has been a major impediment to the economy, the World Bank added.

Dr. Naji Sharrab, a political science expert at Gaza's al-Azhar University expected such moves to have an "Effective and active" influence. They would demonstrate that Palestinians, "Can do nothing without Abu Mazen and (make people) appreciate the moderate trends inside the Palestinian Authority," he told UPI.

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