Palestine in 2006 was dominated by a single event: the Palestinian Islamist group Hamas's overwhelming victory in last January's general elections.
Israel then launched an economic embargo on the new government, withholding tax-revenues belonging to the Palestinian Authority (PA) and successfully urging western governments to cease aid payments.
The result has been a slow strangulation of the already crippled Palestinian economy and a great intensification of Palestinian suffering. The justification was three-fold: Hamas's refusal to recognise Israel's right to exist, to formally renounce violence and to accept previous agreements with Israel.
Now, in the light of Israel's flagrant contempt for the Palestinian right to their own state, why should Hamas recognise Israel, thus giving up its major bargaining counter? The second demand, that Hamas renounce violence, seems out of touch with reality in the light of Israel's extreme violence towards the Palestinian people. In 2006, Israeli forces killed 660 Palestinians, more than three times the figure for 2005.
The outbreak of the second Intifada in September 2000 was the first nail in the coffin of Israel's strategy of using the dominant Fatah leadership under the late Yasser Arafat as a kind of colonial policeman keeping in check the militants, especially Hamas.
The second nail was Hamas's electoral victory, a surprise to most western politicians and observers but heavily trailed in Palestinian municipal elections at the end of 2004 and beginning of 2005.
In 2006, Israel worked hard to provoke attacks by Hamas which had held to a 17-month self-imposed truce. Last June, Israel finally succeeded. Its forces killed 30 Palestinian civilians and assassinated a Gaza militia leader. Palestinian fighters fought back with home-made rockets and also captured an Israeli soldier. This served Israel with a convenient pretext for a massive retaliation - destroying the main power station, roads and bridges and closing crossing points into the strip, blocking off food supplies and threatening mass starvation.
Last year, Israeli forces killed some 405 Gazans. They hoped in this way to turn the Palestinian people against Hamas. Israel believed that by wrecking Hamas, just as they did Arafat, they could then claim they had "no partner for peace". Israeli premier Ehud Olmert could then implement his plan for a unilateral imposition of "final" borders, annexing vast swathes of Palestinian land.
Most Palestinians voted for Hamas because they see them as incorruptible and trustworthy fighters for Palestinian freedom. In contrast, Fatah leaders were seen as corrupt and too willing to grant concessions to Israel - recognition in 1988, acceptance that Israel should retain control of the major settlement blocs, and quietly dropping the demand of the refugees' right of return. And recent signs indicate that Fatah is complicit in Israeli and western attempts to destabilise the Hamas government.
Given Hamas's refusal to capitulate, a new strategy appears to be evolving. After succeeding Arafat as Fatah leader, Mahmood Abbas was, like his predecessor, sidelined. In recent weeks, however, Israel and the US have seemed inclined to build him up, encouraging him to stage a coup toppling the Hamas government.
This strategy has three aspects. First, with the failure of talks aimed at creating a national unity government, on 17th December, Abbas called for fresh legislative elections. This came a day after U.S. Secretary of State Rice promised to try to persuade the US Congress to back Abbas with additional funding.
Abbas' speech also followed an assassination attempt on Hamas premier Ismail Haniya by Fatah members as he tried to return to Gaza carrying donations from Middle East governments. This money was intended to pay the salaries of thousands of public employees and testified to Hamas's potential success in breaking the western embargo without political capitulation despite months of Fatah-organised strikes earlier in the year.
In any case, it is clear to most Palestinians that Abbas does not have the authority to call fresh elections, and that, even if they were held, the result would be no different, given the failure of his policy of conciliation and compromise to win any serious concessions from Israel.
Secondly, however, Olmert has been persuaded, by Tony Blair among others, to release a fraction of the £300 million tax-revenues owed to the PA. And he has promised to hand over a further £50 million for "humanitarian purposes". The idea, touted by Blair during his recent visit, is for Abbas to get the credit for this, thus undermining Hamas. Finally, Israel and the US are trying to fan the flames of the conflict between Hamas and Fatah, in the belief that civil war would result in a Fatah victory.
In the meantime, ordinary Palestinians have engaged in new methods of non-violent resistance to Israeli attacks. On 19th November, hundreds of Palestinian civilians converged around houses in the Jabalya refugeee camp in Gaza threatened with destruction by Israeli air strikes, forcing the Israelis to call off the attacks.