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Sgt. Gilad Shalit arrives at his home in the northern village of Mitzpe Hila in this handout released by the Israeli Defence Forces on Oct. 18, 2011.Reuters

It was a day of unbridled joy in much of Israel and the Palestinian territories yesterday as families were reunited with loved ones long held in captivity.

But all that celebration may not last long as the prisoner exchange agreed to by Israel and the Islamic Resistance Movement, Hamas, creates as many controversies as it resolves.

Still no love between Hamas and Fatah

Tuesday was marked with remarkable camaraderie between members of Hamas and members of Fatah.

In the Palestinian village of Kobar, 20 minutes north of Ramallah, hundreds of celebrants turned out as much for the prisoner who wasn't released Tuesday as for the two who were.

This is the home town of Marwan Barghouti, a prominent and popular Fatah leader whose giant posters adorn the streets of this hillside community. Mr. Barghouti, whom many view as the next Palestinian president, is serving five life sentences for his involvement in the killing of five Israelis during the second intifada of 2000-2004.

Hamas put Mr. Barghouti on its wish list of prisoners to be released (even though he hails from the rival Fatah movement), but Israel crossed out his name from consideration.

The residents of Kobar filled the town square and adjacent streets in honour of two other returning heroes, Fakhri Barghouti and Nael Barghouti, cousins of Marwan. The two men, one a Fatah member, the other a Hamas supporter, were convicted of staging a raid on the Israeli settlement of Halamish, not far from Kobar, in which a settler was killed.

Outside Ofer prison, west of Ramallah, thousands of supporters of Hamas and Fatah danced and sang together, even waved each other's flags. At the official reception in downtown Ramallah, the podium was shared by Palestinian Authority president Mahmoud Abbas and a Hamas founder, Hassan Yusef.

Sheikh Hassan and many others may have spoken the language of "national unity" between the factions, but it's not something close to most Palestinians hearts.

The prisoner deal doesn't help matters. While Egypt is encouraging both Hamas and Fatah to reconcile their differences, Mr. Abbas is the one most strongly resisting. Mr. Abbas resents Hamas's trumpeting of the prisoner exchange as a "strategic victory" in the words of Hamas leader Khaled Meshaal Tuesday evening in Cairo. And he is wary of Hamas's new-found popularity being wielded to pressure the PLO chairman to accord Hamas just as many seats at the table as the president's Fatah faction.

In Kobar too, as the sun set in the village and the day of mixed celebration wrapped up, young Fatah supporters could be seen tearing down Hamas flags on the outskirts of town.

Israel can't afford another Shalit

Most everyone in Israel is pleased about the return from captivity in Gaza of the young soldier, Gilad Shalit. However, there is real worry about such a thing happening again.

Critics of the prisoner exchange believe it may incite Palestinian militants to take more prisoners in the hope of winning the release of some of the 5,000 Palestinians still in Israeli jails.

Indeed, on Tuesday in Ramallah, as excited crowds of several thousand family members and friends cheered and danced, the chant they took up was: "The people want / another Shalit."

Such a prospect is among the reasons given by Israeli Foreign Minister Avigdor Lieberman and two other Israeli cabinet ministers for their decision to vote against the Shalit prisoner exchange.

It was also among the reasons why several Israelis took the matter to court, seeking an injunction against releasing so many convicted terrorists. The motion failed.

"This isn't just about the past, it's about the future," said Steve Bloomberg, 52, speaking from his wheelchair outside the courtroom Monday evening. "What will be the deterrent for terrorists if jail is not a long-term option any more?"

Israel's military command also is worried. Defence Minister Ehud Barak, even as he welcomed back Sgt. Shalit, 25, said Israel must reconsider its basic approach to potential kidnappings. "The painful discourse of recent days is an indication of the weighty decisions we shall have to take," he said.

An unnamed Israeli military commander, in interviews this week with Israeli media, described the steps now being taken to avoid "another Shalit."

"Our soldiers," he said, are ordered "to fire at a group of abductors even if that means their [Israel Defence Forces]comrade would be killed." Israeli soldiers understand the risk, the commander said: "They cannot become another Gilad Shalit."

Hardening lines

Sgt. Shalit, held for five years, was brought from Gaza Tuesday morning to Egypt before being taken to Israel. While in Sinai, Sgt. Shalit told an Egyptian television interviewer that he hoped his release would encourage peace between Israelis and Palestinians. Don't hold your breath.

In the prisoner deal involving Israel and Hamas, both sides made significant compromises to reach agreement. However, it's not at all clear that the message of compromise is trickling down to the troops.

In Kobar, Nael Barghouti, 54, one of the two Barghoutis released Tuesday, reflected on the dreams he had when, as a 21-year-old, he attacked and killed an Israeli settler.

"My dream was a Palestinian state," Mr. Barghouti said. His goal today, he said, is no different. "It's still to have a Palestinian state."

Mr. Barghouti and his brother were the two longest-serving Palestinian prisoners. In the years since their incarceration in 1978, however, the Palestine Liberation Organization and even some members of Hamas now accept a two-state solution to the conflict with Israel. Could Mr. Barghouti imagine a Palestinian state living alongside Israel?

"Absolutely not," he said. "Palestine cannot have two states."

"The Jews are welcome to stay, but it's our state," he said.

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