This is a major, major development. Obviously, the major factor in allowing Sharon to make the settlement concession and Abbas to renounce terror (at least in words) is the sidelining of Arafat. I have been saying for weeks that Arafat is the key to this process. He cannot make peace but he can sideline any effort by others to do so. It seems that with his marginalization both sides have removed a substantial psychological barrier. For Israel it is the fully justified hatred and mistrust of a racist murderer who has renounced their right to exist and engaged in a campaign of mass murder against them. For Abbas, it is the spector of denunciation and possible assassination. The thought of being labeled a traitor marked for death by the supreme leader of the PLO is enough to give anyone pause. The key to the process now is the continuation of the US policy of keeping one foot firmly on Arafat's neck. The Eurpean Left are the only supporters he still has and, despite their immense influence on the media and the intelligensia, the Iraq War has done great damage to their credibility. Hopefully, the US and the other Arab states (who soured on Arafat long ago) will be successful on foiling his efforts at shattering the process now set in motion. Of course, nothing has really happened yet, but the framework does seem encouraging.
Without question the man to watch is Mohammad Dahlan. Until recently the PA security chief for Gaza and now Abbas' security minister, he has immense sway and credibility with the terror groups operating in PA territory. When he comes out against terror and, most importantly, begins to take action against it, this will indicate a major change in the political culture of the PA. By the same token, until Dahlan moves it is safe to assume that nothing significant has happened as far as cracking down on terror. He is the key, keep an eye on him.