Before the Iraq war, optimistic neo-conservatives came up with a new slogan about the Israel-Palestine conflict: “The road to Jerusalem runs through Baghdad.” American victory in Iraq would create the political conditions for peace between Israelis and Palestinians.

Now that the US is well on the way to failure in Iraq a new theory is doing the rounds. This time, “the road to Jerusalem runs through Tehran.” It is the rising power of Iran – fostered by the war in Iraq – that may create the conditions for peace between Israel and Palestine.

While the Baghdad road theory was based on an optimistic vision of the democratic transformation of the Middle East, the Tehran road theory is based on fear. It argues – essentially – that the rise of Iran is scary enough to give all sides in the Israeli-Palestinian dispute a new interest in finding a settlement. This has become especially urgent since the militant Islamists of Hamas – who are supported by Iran – have seized power in the Gaza Strip and split the putative Palestinian state in half.

Condoleezza Rice, the US secretary of state, is trying to take advantage of the moment. She has promised that a peace meeting will be convened this autumn. The usual suspects will be there: the Israelis, the Palestinians, the US, the Egyptians, the Jordanians. The Saudis might also come, which would be regarded as an important development.

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Life for the Palestinians in Gaza and the West Bank is getting steadily worse. On Wednesday, an Israeli official told me that the Gaza economy is in a “state of total collapse”. Travel for Palestinians on the West Bank is incredibly arduous because of the huge number of Israeli road-blocks.

But – right now – many Palestinians seem more pre-occupied by the internal dispute between Hamas and Fatah than by the Israelis. I got a sense of the bitterness of the dispute when I visited Issa Qaraqe, a Fatah legislator, in his offices in Bethlehem.

Qaraqe runs the Palestinian Prisoners Association, which tries to look after the interests of the 11,000 Palestinians in Israeli jails. He himself was imprisoned for 10 years and then released in 1993. On his office wall is a large poster of Bobby Sands, the first IRA hunger-striker to starve himself to death in a British prison.

But Qaraqe’s take on Hamas is almost as dark as the version you will get from the Israeli foreign ministry. He is not uncritical of his own organisation – and will admit that Fatah has committed human-rights violations and made huge political errors. But Hamas, he says, are Islamist fanatics and the tools of Iran. He says that while Fatah have a secular, democratic and nationalist view of the Palestinian problem, Hamas “approach the Palestinian issue as a religious question, not a national question.” He claims that Gaza is in the early stages of “Talibanisation” – and points to the destruction of the statue of the unknown soldier in Gaza, likening it to the Taliban’s destruction of Buddhist statues.