Two opposing trends were affirmed in Israel and Palestine this week, and one of them must disappear.

The Fateh congress in Bethlehem reaffirmed the strategic decision among a majority of Palestinians to seek a negotiated peace with Israel, while a string of senior Israeli officials said that they would continue expanding settlements in East Jerusalem and would not repeat the “mistake” of withdrawing from Gaza.

These trajectories of Palestinians seeking peace and Israelis perpetuating colonial occupation are so starkly contradictory that they clearly cannot persist as they are. Yet they both also represent failed policies that must be changed if the interests of Israelis and Palestinians are ever to be reconciled in a peace agreement that respects both their national rights.

The Fateh congress in Bethlehem reaffirmed what has been clear since 1988, when the Palestine Liberation Organisation (PLO) recognised Israel’s right to exist and renounced terrorism. This decision only formalised the PLO decision of a decade earlier to establish a Palestinian state on any part of the 1967 occupied territories that was liberated from Israeli control.

For the past 40 years, during which it has dominated Palestinian national politics, Fateh has shown itself to be unable to wage either war or peace. Consequently, Palestinians everywhere, but especially in the West Bank and Gaza, suffer the worst possible combination of political stagnation, economic stress, and widespread personal vulnerability and insecurity.

After 1993, Fateh wasted the historic opportunity of the Oslo agreement to rally all Palestinians behind a state-building project, and after 2002, it again wasted the opportunity to rally the Arab world behind the Arab Peace Initiative, issued at the 2002 Beirut summit.

Rarely in modern history has a political movement that enjoyed credibility, legitimacy and respect in its early years morphed so badly into sustained incompetence in its later years.

So for the Fateh congress now to declare, again, that the Palestinians choose peace with Israel while reserving the right to engage in armed resistance to occupation seems rather unconvincing, for the movement that once resonated widely around the Arab world has had 40 years to show that, in fact, it is unable to activate either option.

In Israel, meanwhile, on the same day, Interior Minister Eli Yishai said that Israel must go ahead with plans to expand a settlement enclave near Jerusalem despite American objections. Knesset Speaker Reuven Rivlin, on the same tour of Israeli settlements with Yishai, agreed, adding: “If we don’t build here, the Palestinians will.”

Defence Minister Ehud Barak added his voice to the continued Zionist colonisation of Jerusalem when he attended the dedication of a new Torah scroll at a synagogue in the Muslim Quarter of the Old City Sunday. The prime minister, Benjamin Netanyahu, for his part said the withdrawal of nearly 9,000 Jewish settlers from the Gaza Strip four years ago was a mistake that brought neither peace nor security, and would not be repeated.

For good measure, the Israeli air force also bombed some of the tunnels that Gazans use to import essential materials from Egypt, to get around the strangulation siege that Israel has imposed on Gaza.

Israel wants the right to colonise and terrorise, while demanding acquiescence from the Palestinians.

The clash between the colonialism of Israel and the incompetence of Fateh is one of the great tragedies of the modern Middle East, but like all such dynamics, it does not pass unnoticed. The rise of Hamas and other militant Palestinian movements has been a direct response to both these trajectories - an organic Palestinian determination to resist both the pain of perpetual occupation and the added pain of Palestinian complicity in perpetuating this condition.

The greatest and saddest of ironies is that Israel turned a blind eye to the growth of Hamas in the 1980s, when it saw it as a means of weakening Arafat’s Fateh movement. Today, Israel has reversed position by giving special permission to the Fateh delegates from throughout the region to enter occupied Bethlehem in order to attend the movement’s congress, as it tries to support Fateh in order to weaken Hamas. Neither strategy will work, because external manipulation to craft a Palestinian leadership to Israel’s or the United States’ liking will always fail the test of legitimacy among the Palestinian people.

The three strategies on show - Israeli colonialism, Fateh’s acquiescence and Hamas’ resistance - reflect short-term approaches that are unlikely to generate lasting, just solutions to this conflict, while inflicting more moral pain and physical suffering on all concerned.

There are no easy exits from this corner, though the starting point for any movement to more effective and mutually beneficial policies is to accept that current approaches have been universally catastrophic for all concerned. This lesson is especially relevant for external mediators who try their hand at peace making.