The most optimistic school of thought among Palestinian leaders holds that there is not much difference between a Labour and a Likud government. "Their motto is that a cat is a cat whether it is black or white," says a senior western diplomat. "They mean that Israeli governments behave the same towards Palestinians whatever party they belong to."
But the whole strategy of Yasser Arafat, the Palestinian leader, was based on the belief that it matters a lot who holds power in Israel. He did everything he could to get Shimon Peres, the architect of the Oslo accords, re-elected on 29 May. "We used to negotiate with friends and now we must negotiate with enemies," says one of Mr Arafat's senior lieutenants.
A crisis in relations between Mr Arafat and Binyamin "Bibi" Netanyahu could come quickly. Mr Netanyahu won the election because he promised Israeli voters more security for themselves and fewer concessions to Palestinians. No sooner was he elected, however, than Ami Ayalon, the head of the Shin Bet Israeli security agency, told him that "a good part of the Shin Bet's recent accomplishments were based on co-operation with the Palestinian security services."
The meeting between Mr Ayalon and Mr Netanyahu was leaked to Zeev Schiff, columnist for the daily Ha'aretz, presumably by sources in the Shin Bet. It is important because it clearly states the Shin Bet view that Mr Arafat's support is essential to fight Hamas and Islamic Jihad, the Islamic guerrilla movements, and he will not continue co-operation if agreements with Israel "are not fulfilled and are steamrollered by us".
But does Mr Netanyahu dare to carry through the Oslo accords? He has promised that he will make no concessions on Jerusalem, Palestinian statehood or the right of Israelis to settle in the West Bank. He says he does not want to meet Mr Arafat. The strength of the religious right in his coalition gives him little room for manoeuvre. He has little to offer the Palestinians as an incentive to work with Israeli security to prevent another suicide bomb.
The only area where Mr Netanyahu might offer concessions is in allowing Palestinians to work in Israel. Terje Larsen, the special co-ordinator for aid to Gaza and the West Bank, says Mr Arafat "will be able to pay salaries for June but not for July". Every 10,000 Palestinians allowed to work in Israel produces $25m (pounds 16m) in revenue for Mr Arafat's Palestinian Authority. By letting 150,000 Palestinians into Israel, Mr Netanyahu could end the economic crisis in Gaza and the West Bank.
It is doubtful if the new government will do anything so radical. "Some Palestinians believe that Likud will lift the closure of Gaza," says Mr Asfour. "I have no such feeling." There is no evidence that not allowing Palestinian workers legally into Israel deters suicide bombers, none of whom had permission to be in Israel when they blew themselves up. But the closure makes Israelis feel more secure and is therefore likely to stay in place.
Not everybody in Gaza is so gloomy. Mahmoud Zahar, spokesman for Hamas, says that his organisation does not care if Likud or Labour wins the election. He is presumably calculating that Mr Arafat will have to relax his grip on Hamas. Mr Zahar says: "We did not expect Peres to win. He is a man of many failures. He is known as a man who hesitates."
Mr Zahar does not respond directly to the suggestion that it was three Hamas suicide bombers in February and March who ensured Mr Peres' failure at the polls. He does say, however, that when Mr Peres gave his consent to the assassination of Yahyah Ayyash, the chief bomb maker of Hamas, in January he "knew that Ayyash would be avenged".
Is there any way out of Mr Netanyahu's dilemma? He is in no position to provide Israelis with greater personal security without the co-operation of Mr Arafat. But even the marginal contacts between his aides and Palestinian leaders have created anger on the right. For the moment Mr Netanyahu looks confident and in control. He appears to have rejected the idea of a national unity government with the defeated Labour party. But perhaps he and other Israelis should be concerned that the only Palestinians pleased by his victory belong to Islamic Jihad and Hamas.Reuse content