Israel and the Palestinian factions are awaiting the formation of the next Palestinian government -- each for their own reasons. Graham Usher reports from Jerusalem Tuesday midnight was supposed to have been the expiry date for the "emergency" government decreed by Yasser Arafat one month ago following a suicide bombing in Haifa, and the real fear Ariel Sharon would invoke it to "remove" the Palestinian leader once and for all. The emergency has apparently passed, but the appointed eight-man cabinet remains in a caretaker role until the Palestinian Authority parliament convenes for a confidence vote in a full 21-minister government "next week", insists Prime Minister Ahmed Qurei (Abu Alaa). Much seemingly rests on the government's establishment. Qurei wants his premiership endorsed by president and parliament alike to steel him in discussions with the Palestinian factions for a new "mutual" Palestinian-Israeli ceasefire. Sharon needs a new Palestinian interlocutor to give an illusion of "progress" when in fact there can be none. The snag restraining all is the same that gnawed away at the government of Qurei's predecessor, Mahmoud Abbas (Abu Mazen). According to PA officials all of the ministries in the new cabinet have been agreed between prime minister and president except for Interior, mandated under the long-expired roadmap to "consolidate" the PA's police into a fighting force able to take on and disarm the Palestinian militias. Qurei insists the new man be former Gaza police chief Nasser Youssef; Arafat insists on anyone but. The reason -- say PA sources -- is that Qurei has been told the appointment of an interior minister "independent" of Arafat would encourage America to throw its weight behind the call for a Palestinian-Israeli truce. For the Palestinian leader this was enough to tar Youssef with the same conspiratorial brush as Abbas and his preferred interior minister, Mohamed Dahlan. "He [Youssef] wants to work with the Americans and Israel against the interests of our people," Arafat reportedly told members of the Fatah Central Council. There is little reason to see Arafat budging on this. He has already effectively curtailed the powers of the Interior Minister courtesy of a new 13-man National Security Council that he heads and to which all eight or so Palestinian security forces are answerable. He is also enjoying his highest popularity rating in Palestinian opinion in five years, less for his governance than for the stated Israeli and American desire to unseat him. Moreover, he is facing a weakened Israeli government. During a three-day excursion to Russia, Sharon announced he would be ready to meet Qurei "within a very short time", quietly dropping the Israeli condition that the PA wage "a real war" against Hamas and Islamic Jihad (something Qurei and Fatah have explicitly ruled out). Defence Minister Shaul Mofaz, too, has been quietly meeting with PA officials and issuing orders that will slightly relax the draconian closure regime imposed on the occupied territories after the Haifa bombing. The reason for these apparent Israeli about-turns is simple: failure. Last week the Israeli public were privy to a division lying at the heart of Israel's military establishment over how to combat an armed Intifada that shows no signs of "defeat". The position of Israel's Shin Bet intelligence service is that any abatement of the closure before the construction of the West Bank barrier risks suicide bombers in the heart of Israel. For Army Chief of Staff Moshe Ya'alon such a perspective is so myopic as to be blind. "There is no hope, no expectations for the Palestinians in the Gaza Strip, nor in Bethlehem and Jericho. In our tactical decisions we are operating contrary to our strategic interests," he was quoted as saying in Israel's Yediot Aharonot newspaper. There is a large dose of hypocrisy in Ya'alon's concern. No less than Sharon and Mofaz he has been the architect of Israel's iron fist policies in the West Bank and Gaza, likening them to chemotherapy for a "Palestinian threat that harbours cancer-like attributes". He also crowed the loudest that the installation of the Abu Mazen government augured the end of Arafat's reign and start of a PA crackdown on its Islamist and nationalist opponents. His hubris lasted until 6 September, when the government collapsed due to Israel's refusal to grant it the most minimal of reprieves. Ya'alon is not offering the Palestinians a wider political horizon than Sharon and Mofaz, which boils down to a long-term "interim" occupation. His sole innovation is the fear that unless Israel eases the blockades on the Palestinian areas and allows more Palestinian jobs the PA could well collapse, leaving the army not only with martial rule over 3.5 million Palestinians but also responsibility for their welfare. It is a revelation that has a long history of turning hawks into doves. Will humanitarianism be enough to expedite a ceasefire? So far Hamas and Jihad have signalled a willingness to talk if "Israel ends the aggression against our people". In practice -- say Hamas sources -- this means guarantees that Israel end its policies of "assassinations, incursions and house demolitions". Egypt is currently mediating between the Islamists and the US to extract an "understanding" that Israel would observe (if not publicly agree to) a cessation of hostilities on these terms. Even if it did there is no chance a government led by Sharon and Mofaz, or an army led by Ya'alon, would agree to freeze settlement construction or reverse the construction of the West Bank barrier, the two most mortal threats to any meaningful future Palestinian state. Nor should the Palestinians expect any greater American pressure on Sharon this time around than occurred before, says Palestinian analyst Khalil Shikaki: "I doubt the US will exert any pressure on Israel for a settlement freeze until the PA starts to act decisively against Hamas and Islamic Jihad. In American eyes the reward of a freeze comes after the crackdown, not before or 'in parallel'." This does not mean a ceasefire is a non-starter. It simply means it will be a trade: no freeze on settlements in exchange for disarmament of the militias and humanitarian relief in return for an end to Palestinian and Israeli attacks on civilians. It is not the preamble towards peace. It is not even the roadmap. It is south Lebanon under Israeli occupation, where temporary quiets always preceded and followed storms.