RAMALLAH, West Bank (Reuters) — While fighting between Israel’s army and Palestinian gunmen has been overshadowed by the war with Hizbollah, the clash in Lebanon could have big implications for the Middle East’s longer running conflict.On one hand it might lead to more violence, with militants feeling emboldened by Hizbollah and with the army happy to deliver a blow to the softer Palestinian enemy after the tougher battles in Lebanon. But it is also likely to spur renewed diplomatic efforts to address a conflict at the core of the region’s troubles while putting in doubt any unilateral Israeli move to effectively impose a border in the occupied West Bank.

“Different people will understand the results of the war differently,” said Yasser Abed Rabbo, a senior official of the Palestine Liberation Organisation. “The most important lesson is that this war should open the door for a comprehensive settlement of the Arab-Israeli conflict.”

Whatever comes next, the initial focus will be the Gaza Strip, where militants — including the armed wing of the governing Hamas Islamist group — triggered an Israeli offensive in late June by abducting a soldier in a cross-border raid.

Fighting in Gaza has continued in the shadow of the war with Hizbollah and ramped up pressure on the Hamas-led government, already straining under a Western aid embargo to get Hamas to recognise Israel, renounce violence and accept peace accords. Both Hamas and officials from moderate President Mahmoud Abbas’s camp have indicated progress in mediation to free the prisoner <\m> possibly in exchange for a behind-the-scenes Israeli pledge to free some jailed Palestinians at a later date. Israel also demands an end to rocket attacks from Gaza. If mediation fails, there will be little prospect for anything except further fighting.

Many Hamas leaders see the fact that Hizbollah survived the Israeli onslaught as an example for themselves. “After Lebanon, those who did not believe in resistance now have to reconsider their positions,” said Hamas lawmaker Mahmoud Misleh.

While the gunmen might feel that Hizbollah has delivered a demoralising blow to Israel, the army has much greater experience against the Palestinians plus better intelligence. The militants are nowhere near as well armed as Hizbollah.

“Once Israel’s hands are free it will switch focus to Hamas,” said New York-based academic Muhammad Muslih. Tellingly, Israel has lost only one soldier — to “friendly fire” — during a Gaza offensive that has killed 180 Palestinians, about half of them militants. “To the extent that Hizbollah declares victory and people like Hamas believe it ... it could very quickly be negated by Israel moving large numbers of troops from south Lebanon to Gaza,” Israeli analyst Yossi Alpher said.

Some Palestinians also believe that Hizbollah’s apparent strength has actually exposed the relative weakness of Hamas and other Palestinian militant groups who have proved far less effective in fighting Israel. If the immediate crisis in Gaza is solved, it could lead to better prospects for change, though peace talks look an unlikely prospect while the Palestinian government is headed by a group that formally seeks Israel’s destruction.

“We could open the door for the resumption of peace moves,” one senior Abbas aide said.

Israeli Prime Minister Ehud Olmert and his US ally remain keen to sideline Hamas and strengthen Abbas, who wants negotiations for a Palestinian state alongside Israel.

But that could revive an internal Palestinian power struggle between Hamas and Abbas that was largely put on hold when the Gaza crisis blew up. There is no guarantee that Abbas would win out in any confrontation with Hamas.

A political accord that Hamas and Abbas reached to end their squabble fell far short of what the West wants in terms of getting Hamas to change its stance, or of an arrangement that could bring a Palestinian unity government.

The Palestinians certainly expect more diplomatic attention after the Lebanon war. British Prime Minister Tony Blair has already said he plans a visit to try to revive peace efforts.

One consequence of the war with Hizbollah has been to undermine unilateral Israeli plans for withdrawing from some isolated West Bank settlements to retain the biggest ones, effectively setting a border in the absence of negotiations.

Palestinians fear such a pullout would leave them with only fragments of the state that they seek in the Gaza Strip, West Bank and East Jerusalem. Israelis are warier now, having seen from the examples of giving up south Lebanon in 2000 and the Gaza Strip in 2005 that giving up land does not necessarily improve security.

“This war has killed the idea of unilateral withdrawals. This a problem for Olmert ... The only true and realistic initiative is to engage very seriously with Abbas on leaving the West Bank,” said Cameron Brown of the Herzliya Interdisciplinary Center in Israel. If there are no negotiations, however, the likely alternative to a further pullout might well be no withdrawal from any more land.