KHAN YOUNIS, Gaza Strip - An opening of Gaza's blockaded borders, access to billions of dollars in foreign aid, a popularity boost -- Hamas would have much to gain by working out a prisoner swap with Israel and a power-sharing arrangement with its West Bank rivals.
Instead, Gaza's Islamic militant rulers have been sticking to their demands, even though that would seem to be hurting their interests. But some analysts suggest that Hamas believes time is on its side and that Israel, along with moderate Palestinian President Mahmoud Abbas and the West, will eventually give in.
"They are not acting like people who are negotiating from a position of weakness," said Robert Blecher, an analyst with the International Crisis Group think tank.
Egypt has been mediating parallel sets of talks involving Hamas -- with Israel on exchanging a captured Israeli soldier, Gilad Schalit, for hundreds of Palestinian prisoners, and with Abbas' Fatah movement on a transitional government that would pave the way for new elections.
Hamas wants Israel to release 450 prisoners with lengthy terms for Schalit, and resists demands by Abbas that the unity government commit to the Palestine Liberation Organization program, including its recognition of Israel.
In both cases, Hamas is refusing to make concessions that could lead to a lifting of the Gaza closure, imposed by Israel and Egypt after Hamas' violent takeover there in 2007.
"Hamas is sticking to its demands," spokesman Ayman Taha said after the failure of the prisoner talks Tuesday, even adding a threat that Hamas would try to capture more Israeli soldiers. On Wednesday, Hamas' military wing said it might harden demands in future talks.
Hamas' defiance comes, in part, from surviving the border blockade and Israel's recent military offensive in Gaza, which served to emphasize how hard it would be to bring Hamas down.
Ending Gaza's isolation has become more urgent since the war -- reconstruction requires open borders and huge sums in foreign aid, already promised by donor countries.
But several Hamas officials said the group is in no hurry.
On the prisoner swap, Hamas expects to see its demands met if it waits long enough.
"We believe the occupation (Israel) is going to retreat," said Osama Muzini, a Hamas spokesman.
In the final stage of negotiations over prisoners this weekend, outgoing Israeli Prime Minister Ehud Olmert offered to free 320 prisoners of the 450 Hamas was demanding.
Compromise on the prisoners might be seen in Gaza as inadequate compensation for the hardship that befell the territory after Hamas-allied militants captured Schalit in a cross-border raid in 2006. Israel closed Gaza's borders, bombed Gaza's only power station and unleashed military strikes that killed hundreds.
Hamas is also under pressure from the families of prisoners not to leave any lifers behind.
"Getting the prisoners out is more important than open borders," 70-year-old Khadije Salameh said Tuesday, flanked in her living room in the town of Khan Younis by the gold-framed posters of her imprisoned sons Hassan and Akram.
Hassan Salameh is among the 11 prisoners Israel says it will never free. Arrested in 1995, he is serving 48 life terms for masterminding several suicide bombings that killed dozens of Israelis.
The release of the 11 names and Olmert's pledge not to lift the blockade without Schalit will tie the hands of his designated successor, hard-line Likud leader Benjamin Netanyahu. Hamas could have a tough time getting a better deal from Netanyahu.
The deadlock complicates the international community's plans for Gaza reconstruction.
"We are not able to bring anything in for rebuilding Gaza until the case of the Israeli soldier Schalit is resolved, and that's what the Israelis are telling us," Karen Abu Zayd, who runs the major UN aid agency in Gaza, said Tuesday.
Donor countries are ready to give billions of dollars to fix the war damage, including repairing or rebuilding 15,000 homes, but can't do so without open borders and won't give the money to Hamas.
The purpose of the Palestinian unity talks is to form an interim government made up of both rival factions until new elections are held by January 2010.
Such an arrangement would let funds start flowing, but would force Hamas to soften its opposition to Israel. And Hamas can't afford to compromise on its principles, especially with the possibility of elections in less than a year, said Hani Basoos, a Gaza analyst now based in Europe.
Hamas is committed to Israel's destruction, in contrast to Fatah, which seeks a Palestinian state alongside Israel. An implicit recognition of Israel would also undercut Hamas' main argument in any election campaign that Fatah's 16 years of peace talks with Israel have been a waste of time.
Hamas has shown that its stubbornness is not a negotiating tactic, Basoos said.
"If they wanted to compromise, they would have done it last year or the year before," he said. "It is a waiting game."
