This is the only one to discuss what was said in a way which is constructive.

To answer your question.

Fatah remained in power and Arafat/Abbas was elected PM only because they were felt to be the ONLY possible option for achieving peace. Remember that Arafat and Fatah were elevated by Israel and the Western Powers and given the mantle as being the voice of the Palestinian people in order to provide a basis for Peace discussions. They were not elevated for being good administrators, but for other reasons which center mainly on being secular and convenient. It turns out they were pretty poor at running a government, completely lacking in vision, corrupt and they have obviously failed in the peace process.

Hamas was elected not because it is a terrorist organization, but because they were the only alternative to the highly corrupt Fatah party capable of governing. Fatah was not moving forward in terms of creating a viable country and infrastructure. Hamas while they have a terroristic wing also has vast knowledge in actually running things like hospitals and schools plus have excellent street credibility with the Palestinian people as fighting corruption.

At this point I think the Palestinians, while they desperately want peace, believe the peace process has stagnated and are wanting to move on. Their focus is now internal to themselves and not external to things such as Israel and as such Hamas could offer them some expectation of getting things working again. This is what President Carter is talking about when he says despair has forced them to move on. Had there been a secular alternative not tied to Fatah capable of handling the internal administrative challenges, they would likely have taken it.

As it stands, the external pressure that is being applied to them via sanctions is likely to create a stronger and more ideological enemy than existed a few years ago. A people without hope are a dangerous enemy. Prior to this past election, the Palestinians had hope.

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On Edit: Grammar