Washington, DC, May. 2 (UPI) -- The Palestinian elections due to be held on July 17 will be of extraordinary importance. But it may well be a disaster -- extreme even for that people´s catastrophe-ridden history.

The election will set the framework in which the Palestinian Authority enters serious negotiations with Israel for a comprehensive settlement of the conflict. Five years ago the Palestinian leadership rejected a chance for both peace and a Palestinian state and instead plunged the area into four years of bloody, terrorist war. Now it has another chance. What happens if the Palestinians throw away this opportunity as well?

To win the elections, the new Palestinian leaders must achieve two things. First, Fatah, in effect the ruling Palestinian party, must unite behind them on a relatively moderate program. Next, Fatah has to dominate Palestinian politics.

If the nationalist Fatah is defeated -- or seriously challenged -- by Islamist Hamas, the chance of getting a state could be set back by decades. Nationalists would be too intimidated to make the compromises needed to achieve peace or, even worse, the opportunists among them could see an alliance with Hamas as the way to gain power for themselves. Hamas itself would believe it can take over the entire movement, making it more violent against Israel and aggressive toward other Palestinians.

If only as a matter of self-preservation, one would expect the leadership to act quickly and decisively. Among the actions needed:

-- Show their people that the new leaders are doing a good job by fighting corruption, building a viable economy, and disarming militant criminal elements that terrorize their own people.

-- Work effectively with Israel to persuade it to turn over towns quickly, release more prisoners, and coordinate the Gaza withdrawal.

-- Unite Fatah traditional leaders to agree on candidates.

-- From a position of strength, negotiate effectively with the young Fatah insurgents led by Marwan Barghouti and his Tanzim movement to build a strong Fatah election list.

-- Build Fatah institutions able to mobilize support, get out voters, and beat Hamas.

At best, however, the current leaders are operating at 20 percent effectiveness on these issues. At the top, there is only drift and timidity. For example, discontented Fatah gunmen recently attacked PA offices in three towns with no tough response by the leadership.

The old practice of ensuring unity and mass support by blaming Israel for everything will no longer work for the Fatah chiefs because two other forces -- Barghouti´s men and Hamas -- can outbid the incumbent leaders in their proclaimed militancy.

Here is where the weaknesses of PA leader Mahmoud Abbas shows. He is incapable either of mobilizing the masses or forcing his supposed subordinates to obey him. Arafat, who was unchallengeable, could get away with anything. Abbas has no such luxury.

About the only real response to the growing crisis is that within the Palestinian Legislative Council, which is understandably panicking and wants to postpone the elections that are likely to unseat so many of them after a nine-year-long term. Abbas, embarrassed at what such a postponement would show, opposes this idea.

How will Fatah choose its slate? So much time has been wasted that it is probably too late to organize "party" primaries. Who will get which seat? How many positions will be given to Barghouti supporters? The process of working this complex deal out has not even begun.

If Abbas succeeds in putting together a Fatah slate before the elections, many of those left out could secede and run as independents, dividing the nationalist vote. If he fails, there could be multiple candidates everywhere, or an unofficial Barghuti list competing against the official Fatah nominees. This being Palestinian politics, party dissidents would not fear expulsion or punishment for running as independents.

It is impossible to predict the outcome of the elections, but let me give a very rough example. Let us suppose the base support for Hamas is at about 20 percent. It could get another 5 to 15 percent based on admiration for its violence against Israel, religious piety, relative lack of corruption, and as a protest vote against Fatah misrule. That would be impressive enough -- enabling Hamas to dictate much of the Palestinian agenda and negotiating position with Israel. In other words, it could block any diplomatic settlement.

But that´s not all. Say that leftist candidates got 5 to 10 percent. If you throw in independents and competing Fatah candidates splitting the nationalist vote, Hamas could win a shocking number of seats. Even if it did not get a majority -- and presumably refused to enter any coalition government -- any thought of a peace process would be gone. Faced with the likelihood of a Palestinian state likely to become an armed base for anti-Israel terrorist war, Israeli support for concessions would crumble. No Palestinian leader would stand up to Hamas´s insistence on attacking Israel whenever it pleased or its opposition to ending the conflict.

If this is a nightmare scenario, it should be scary enough to mobilize Abbas and his colleagues into dramatic action. Yet it would not be surprising if they failed to meet this challenge. If so, watch out.

-- Barry Rubin is director of the Global Research in International Affairs (GLORIA) Center, Interdisciplinary Center Herzliya (IDC), and co-author of "Yasir Arafat: A Political Biography" and "Hating America: A History" (Oxford University Press, August 2004). His forthcoming book, The Long War for Freedom: The Arab Struggle for Democracy in the Middle East, will soon be published by John Wiley. (Copyright 2005 United Press International 05/02/05)