JERUSALEM -- Palestinian Authority President Mahmoud Abbas and Prime Minister Ismail Haniyeh agreed yesterday to form a new Palestinian unity government, a move Palestinians hope will bring an end to the economic boycott and political isolation of the current Hamas-led government.
Under the agreement, the Cabinet will be dissolved within 48 hours, Palestinian officials said, clearing the way for Haniyeh, as prime minister, to create a coalition government composed of Fatah, Hamas and other political factions.
The apparent breakthrough comes after months of negotiations between Abbas' secular Fatah movement and Haniyeh's militant Islamic group, Hamas, which have been bitterly divided over how to solve the Palestinian crisis triggered by Hamas' rise to power this year. And it suggests that the Hamas government - initially defiant toward Western donors - might have finally succumbed to international and domestic pressure.
Details of the deal reached between the two sides remained unclear last night. Palestinian officials said that negotiations were continuing over which political representatives will have a seat in the new government.
"We have finalized the elements of the political agenda of the national unity government. ... Hopefully, in the coming few days we will begin forming the government of national unity," Abbas said, speaking on Palestine TV with Haniyeh beside him.
Palestinians hope the new government will lead to the easing of the tight international economic blockade that has left the Palestinian Authority broke and the economy in tatters.
"I bring good news to the Palestinian people, and I feel proud and content that at this important moment we establish a national coalition government," Haniyeh said.
Six months ago, the United States and the European Union - which regard Hamas as a terrorist organization - cut off aid to the new Hamas-led government, sinking the already weak Palestinian economy deeper into financial ruin.
The Palestinian government's 165,000 employees - including teachers, doctors, police and civil servants - have not been paid, creating widespread hardship in the West Bank and Gaza Strip. Thousands went on strike this month, leaving hospitals and clinics understaffed and preventing many schools from opening.
The United Nations, the European Union, the United States and Russia - the so-called Quartet promoting Middle East peace - insist that for aid to flow again, the Palestinian government must meet three conditions: recognize Israel, renounce violence, and accept existing agreements between the Palestinians and Israel.
Hamas, which has been responsible for scores of attacks against Israel and remains dedicated to Israel's destruction, gave no indication yesterday that it would make any concessions to Israel.
"Hamas will continue to have its political agenda. ... We will never recognize the legitimacy of the occupation," Sami Abu Zuhri, a spokesman for Hamas, told reporters.
But Palestinian officials say it's not necessary for Hamas to recognize Israel as long as the new unity government does.
On Sunday, Abbas met with British Prime Minister Tony Blair, who offered his support for the Palestinian unity government. Blair told Abbas that the international community was ready to re-engage with the Palestinian Authority if it met all of the Quartet's demands.
After the meeting, Abbas went from his West Bank office in Ramallah to the Gaza Strip, where he held late-night talks on the new government with Haniyeh, leading to yesterday's breakthrough.
Officials say the new government's political program would be based on a document drafted this year by Hamas and Fatah leaders held by Israel, which called for a two-state solution and a Palestinian state within the 1967 borders that would include Gaza, the West Bank and East Jerusalem.
The political program would also incorporate the 2002 Arab Peace Initiative, which not only seeks an end to the Israeli-Palestinian conflict but an Israeli withdrawal from all Arab land captured in the 1967 Mideast war - including the Golan Heights - and a "just solution" to the issue of Palestinian refugees.
Whether the new government's program will be enough to satisfy Western donors so aid can flow again to the Palestinian Authority is not clear. For its part, Israel says it is open to working with a new government if it meets all the benchmarks set by the Western countries and the United Nations, and the release of Cpl. Gilad Shalit, the Israeli soldier abducted by Palestinian militants June 25.
"If there was a Palestinian government that could do that, it would create new momentum in the peace process and be an important step forward and do much to energize the Israel-Palestinian dialogue," said Mark Regev, a spokesman for Israel's Foreign Ministry. "Anything short of that would be more of the same and would lead to greater stagnation - stagnation which helps neither Israel nor the Palestinians."
But Regev said the Palestinian situation was too fluid to predict whether this new government would embrace a new direction.
"We will wait and see," he said.