Looking at Israel this week, it's hard to know which bit of news is the more momentous. On Tuesday night, the Israeli military marched into the Gaza Strip  in an effort to free Cpl. Gilad Shilat -- kidnapped by Palestinian militants on Sunday in a raid that also left two other Israeli soldiers and two militants dead. The militants, including a group connected to the military wing of Hamas, are demanding the release of hundreds of women and underage prisoners being held in Israeli prisons in return for Shilat's release.

That's the bad news. On the positive side of the ledger is the agreement forged by Fatah , the party of Palestinian President Mahmoud Abbas, and Hamas, to which Prime Minister Ismail Haniyeh belongs. The pact appears to set aside the weeks-old power struggle between the two groups for control of the Palestinian Authority. Based on a document created by a group of Palestinian prisoners held in Israel, the document speaks of a two-state solution to the Middle East crisis. By signing the document, Hamas has indirectly recognized Israel's right to exist -- a move which could lead to Western aid money flowing into Palestinian coffers once again. Aid was suspended when Hamas -- considered a terrorist organization by the Europe Union and the United States -- won Palestinian general elections in January.

But the fact remains that Hamas is involved in both stories. Which seems to indicate that Hamas is divided between those trying to govern the Palestinian Authority and those trying to destroy Israel. It's hard to know which side will ultimately prevail.

With the Israelis ignoring the Hamas-Fatah agreement, though, Middle East observers seem pessimistic.

The center-left Süddeutsche Zeitung on Wednesday says that a recognition of Israel by Hamas "would be a sensation." But just how meaningful the Fatah-Hamas agreement is remains to be seen, the paper argues. Just how much has Hamas managed to water down the pact, Süddeutsche wonders? If it's too thin, the US and Europe will be forced to reject it as not going far enough, just as the Israelis have done. But even if the agreement holds up under scrutiny, the kidnapping of the Israeli soldier clearly demonstrates that radical elements are still very much a part of Hamas. And: "In the case of a military action," the paper wrote before the Israelis marched into Gaza, "neither Abbas nor Haniyeh will be able to control the situation."

"Unfortunately there is little cause for real optimism," the center-right daily Frankfurter Allgemeine Zeitung agrees. The kidnapping, the paper posits, wasn't just aimed at Israel, but was also a shot fired by the militant wing of Hamas under the leadership of Khaled Mashaal in Syria at the political leadership of Hamas in Ramallah. "A complete split of Hamas has become a very real possibility -- with one group surrounding Prime Minister Ismail Haniyeh and his government and the other surrounding the ultra-radicals that reject the most recent development.

The Financial Times Deutschland is also skeptical of Hamas's "indirect, sort-of recognition" of Israel, but again for a slightly different reason. On the one hand, Hamas has finally been forced to take a position. "The massive military threat worked. Even if the fate of the kidnapped soldier is still unclear, the Hamas leadership in Ramallah said yesterday that they are pursuing diplomatic channels for his release." The real message: The political wing is distancing itself from the Damascus-based military wing. "But be careful: Hamas has still not fulfilled any of the … conditions demanded by the international community." Hamas has neither declared itself ready to foreswear violence nor has it recognized all international treaties that provide the foundation for Israel's existence.

Interestingly, Germany's other financial daily, the Handelsblatt, opts to focus on the Israeli rather than the Palestinian leadership in these days of military crisis. After all, the paper points out, "neither (Israeli Prime Minister Ehud Olmert) nor (Defense Minister Amir Peretz) have ever been confronted with such a situation in which they were the primary decision makers." Having little military experience, they will be forced to rely on the advice of their generals. But at the end of the day, it is the politicians who are confronted with a difficult decision: Will it be easier to deal with the negative headlines that result from a bloody invasion of the Gaza Strip? Or would the horrendous death of a captive Israeli soldier be easier to handle?

For the left-leaning Die Tageszeitung, the world is witnessing nothing other than Hamas's battle for survival. Hamas didn't agree to indirectly recognize Israel as a result of President Mahmoud Abbas's persuasive abilities, the paper argues. Rather, "it's the complete political dead end -- which Hamas has maneuvered itself into -- which demands a new policy for the group to survive." Hamas underestimated the international opposition its election would trigger and also underestimated the practical difficulties of governing an almost ungovernable Palestinian Authority, the paper argues. And the group didn't even try to control its military wing. "Now, they are experiencing the consequences. Only if they are quickly able to turn over the kidnapped soldier will they be able to secure their survival and garner a bit of international capital out of their extremely important indirect recognition of Israel."