Hamas’ political chief is stepping down after nearly 16 years, leaving the militant Palestinian group with a potential leadership battle just as Islamist allies elsewhere in the Middle East are enjoying momentum from election victories.

Khaled Meshal, who headed Hamas’ headquarters in Damascus, recently informed the group’s leadership council that he won’t stand for reelection, said a Hamas spokesperson in Gaza. It is unclear exactly why Mr. Meshal is choosing to step aside and who is likely to succeed him.

Recent upheaval in the Middle East has been a mixed bag for Hamas. On the one hand, it has empowered groups like the Muslim Brotherhood in Egypt, which controls nearly half of the new parliament, prompting Hamas leaders to boast about an "Islamic Spring" and emboldening backers in the West Bank. But the very same regional changes have cast it adrift from its headquarters in Syria and prompted Meshal to suggest non-militarized confrontation with Israel, to the chagrin of some in the movement.

The outcome of the Hamas leadership change could impact relations with Israel and the US, which consider it a terrorist group, and the rest of the international community.

"It is important to see whether this vacuum will be filled by the moderates or a hawk, because this will affect the future of Hamas and Palestinian politics," says Mohammed Dejani, a political science professor at Al Quds University who believes the Muslim Brotherhood victory will force Hamas to mellow.

Islamic Spring misread?

"People are misreading the Islamic movements in Egypt and Tunis. It is an Islamic Spring, but it's not an Islamic Spring Hamas thinks about. There has been a religious revival, but in a sense of moderation and not in a sense of religious fundamentalism."

Meshal was once considered more of a hard-liner compared to Hamas’ leaders in the Gaza Strip. However, talk of a shift away from military action and accepting a Palestinian state in the West Bank and Gaza Strip have made him look like a pragmatist. He has also been spearheading efforts toward reconciliation with President Mahmoud Abbas and his Fatah party, which support talks with Israel and reject military confrontation.

He had ample reason for the apparent shift. In recent months Hamas started moving staff and families out of Damascus because of the fighting in Syria. Observers believe that Hamas is seeking to open a headquarters in Egypt, and wants to signal that it has the potential to recast itself as more moderate.

Speculation about Mr. Meshal’s departure ranged from losing a power struggle with rivals from the Gaza Strip to a desire to go along with regional trends toward democracy and regime change.

That said, few expect that Hamas’ evolution will be as far reaching as recognizing Israel and approving peace talks. That would risk making the organization look like President Abbas’ Fatah party, which is faulted by Palestinians for failing to win independence though negotiations.

Hard-liners astonished

Even with the current signs of change, Hamas risks alienating its foot soldiers in the Gaza Strip with conciliatory moves. Meshal raised eyebrows with his comments on non-militarized grassroots resistance in a December interview with The Associated Press in which he said that grassroots "popular" protests have the "power of a tsunami."

"Armed resistance is the only way to liberate Palestine, all of Palestine. Seriously, I was astonished when I heard" Mr. Meshal’s comment, said Abu Hassan, a member of the Al Qassam military wing in the Gaza Strip. "I really don’t know what is wrong with Hamas…. Many Hamas Qassam commanders will oppose this idea."

Despite the struggles with ideology, Hamas leaders believe that the winds of regional change are at their back as the spread of elections empowers political Islam. They see parallels to their own history: Hamas rose to political prominence among the Palestinians in democratic elections six years ago, capturing a majority of seats in the Palestinian parliament by channeling popular fatigue with an old guard who were willing to deal with the West.

The recent elections in Egypt gave the Muslim Brotherhood nearly half the seats in the next parliament there, a democratic mandate that is likely to translate into a much more friendly environment for Hamas there compared to the open enmity of former President Hosni Mubarak.

"We as Palestinians paid the price for the Arab dictatorship," says Fawzi Barhoum, a Hamas spokesperson in the Gaza Strip. "We believe that this result of the democratic process might mean full support for Palestinian rights and interest, now that [Arab governments’] hearts are with the people."

A Palestinian poll last month found that the approval rating of the Hamas government in the Gaza Strip rose 7 percentage points to 41 percent from three months earlier. That said, the Islamic militant party still polls second to the secular Fatah party when Palestinians ask about their electoral preferences.

Elections coming soon

The improved public standing of Hamas has given a push to talks aimed at ending a four-and-a-half-year rift with Fatah. Hamas and Fatah have agreed in principle to holding elections in May of this year, and the sides are discussing confidence building measures like a prisoner release. Still, there’s been little progress on implementation.

Hamas legislator Bassem Zarir contends that the success of Islamic parties elsewhere have given Hamas new international prestige. He claims that European diplomats have sought him out for the first time to pick his brain about Hamas' links to the Muslim Brotherhood.

"We are stronger than at any other time," he boasts.

That sense of momentum has filtered down to the streets of the West Bank, where small groups of Hamas supporters have organized demonstrations calling for the release of Islamists in PA prisons.

A year ago Hamas supporters wouldn’t have dared to hold a public protest in the West Bank for fear of arrest by the Palestinian Authority, dominated by the rival Fatah party. But on a recent day, a group of about two dozen Islamist women – wearing green sashes and their faces covered – protested in the central square of Hebron to accuse the PA of holding political prisoners.

"Our feeling is that what is going on in the Arab Spring is in our favor," says Lama Khater, a 34-year old Islamist journalist who comes out to weekly demonstrations. "It has pushed us to come out."

A balancing act

That said, the protest turnout at the Hebron city square was modest, a sobering sign that most Islamist backers still fear of a crackdown by the Palestinian Authority security services.

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Whether or not political Islam is able to continue to gain momentum among Palestinians may depend on a balancing act between Mehsal’s new efforts at moderation and reaffirming its long held hard-line ideology that sets it apart from Abbas and Fatah.

"We haven’t reached [Fatah’s] level," says legislator Zarir. "We appreciate this flexibility and are happy about it ... as long as it doesn’t infringe on our basic principles."