Fatah had its first congress in 20 years over the week, in what was seen as an attempt to save the party from its quickly-deteriorating reputation (which has been, since 2004, increasingly along the veins of "corrupt," "divided," and "ineffective"). After the surprising 2006 loss to Hamas in parliamentary elections, and then its ouster from Gaza by a Hamas coup, Fatah appeared to be running out of time.
This sixth Congress was an exercise in enormous cat-herding, and the vote was severely delayed due to an apparently unexpected addition of delegates and a rather frantic worry about the outcomes. And, for the ruling powers of Fatah, worry was worth having. This "old-guard," as it's being called, lost big--of the 18 seats in Fatah's central committee, old-guarders won only 4 seats. Younger "reformists" won 14, setting the path for a new kind of party. Abbas, despite his links to the old-guard and the beginning of the movement, appears to come out of the congress strengthened, with young and energetic allies in the central committee, as well as a renewed mandate.
This "reform" sub-movement is much more a political party than a resistance movement. They support a two-state solution based on the 1967 treaty lines, and are willing to negotiate with Israel over the issue. They have not dropped the right to "resist by all means" for the independence of the Palestinian people, but doing so would have been political suicide anyway.
But this new Fatah is distinguishing itself from its violent-revolutionary cousins, Hamas, much to the relief of moderates in the US and in the Middle East, Israel included. But its leadership is younger, more popular, and probably less corrupt. The new leadership has a year to get its act together before 2010 elections, in which they hope to re-take control of the Palestinian territories, and can then negotiate with greater legitimacy on behalf of the Palestinian people for statehood.
Whether these negotiations can actually push forward in the face of continued Israeli settlement construction is daunting. Israel may require a change in regime itself before serious negotiations over the details of a two-state system re-emerge. But if the Palestinian Authority can present a moderate, reasonable alternative to the violent and inflexible Hamas, Israeli fears may be assuaged to such an extent that a more reconciliatory leadership will emerge in time. Fatah will need to remain consistently open to negotiations, and more importantly, it will have to impose credible control over all of the Palestinian Authority before the Israelis are likely to see the short-term risks of two-state solutions sink far enough below the potential long-term benefits to seriously consider that road.