Olmert builds Israeli coalition, Hamas takes power

JERUSALEM, Mar 29: Interim Prime Minister Ehud Olmert began building a coalition today after winning Israel's election on plans to impose final borders with the Palestinians by uprooting many West Bank settlements.

In Gaza, Palestinian President Mahmoud Abbas swore in a Hamas government, handing the militants an administration on the brink of financial collapse and fighting Western isolation.

The United States in response ordered its diplomats and contractors not to have contacts with any Palestinian ministries, U S officials said. Hamas is committed to Israel's destruction.

Appealing to Abbas, Olmert said Israel favoured peace negotiations to end decades of conflict.

But in the absence of talks -- a remote prospect with Hamas now in power -- Olmert has vowed to set Israel's border by 2010 by removing isolated settlements in the occupied West Bank and expanding bigger ones.

Olmert's centrist Kadima party fared worse than expected in yesterday's poll, signalling he might struggle to sustain support for his plan. Kadima's showing of 28 seats in the 120-member parliament was among the lowest for an election winner.

But some political analysts said Olmert should be able to stitch together a coalition that would avoid the need to negotiate with right-wing parties opposed to any withdrawal from West Bank land that settlers see as a biblical birthright.

''I think we can run a government with 28 seats. It will be difficult, but possible,'' elder statesman and senior Kadima politician Shimon Peres said on Army Radio.

Opinion polls had originally predicted Kadima would win 44 seats. Election results showed that second place went to centre-left Labour, with 20 seats, while other parties netted between four and 13 seats.

Kadima, founded just four months ago, was expected to seek a coalition with Labour and small parties, in talks expected to last for weeks. Some religious parties and one representing pensioners could back his West Bank plan.

Palestinians condemn Olmert's West Bank plans as denying them a viable state. The sweeping measures would uproot tens of thousands of Jewish settlers while tracing a border along a fortified barrier Israel is building inside the West Bank.

NO CONTACTS WITH HAMAS GOVERNMENT

The Israeli election came two months after Hamas's shock win in parliamentary polls, prompting the Jewish state to halt tax revenue transfers and threats from Western countries to cut aid unless the group recognises Israel and disarms. The new Palestinian ministers swore an oath on the Koran against a backdrop of portraits of Abbas and late leader Yasser Arafat.

The U S directive on Hamas bars American officials from having contacts with Hamas-appointed government ministers, whether they are members of the group or not, as well as with those who work for them, U S officials said.

The decision will limit a wide range of U S programmes, including security coordination through the Palestinian Authority's Ministry of Interior.

Contacts will still be permitted with Abbas, his personal office and non-Hamas members of the Palestinian parliament.

Abbas, who wants a two-state solution but has been weakened by the Hamas election victory, urged Olmert to drop unilateralism. Israel says Abbas has failed to disarm militants.

''This result will not change (anything) as long as the agenda of Olmert himself does not change and he does not abandon the question of unilateral agreements,'' Abbas said.

Arab leaders expressed dismay at the Israeli result, after renewing their own offer of peace-for-land through international mediation. The Arab League's 22 members ended a summit in Sudan with a unanimous rejection of go-it-alone Israeli measures.

TRAUMA

Olmert's unilateral approach appeals to many Israelis worn down by a five-year-old Palestinian uprising and worried by the rise to power of Hamas.

Some 60,000 West Bank settlers could be affected by Olmert's plan, far more than the 8,500 removed from Gaza last year. Some 240,000 Israelis live among 2.4 million Palestinians in the West Bank, territory Israel captured in the 1967 West Asia war.

The trauma for settlers of any withdrawal could dwarf that of the Gaza evacuation which Prime Minister Ariel Sharon had championed in a reversal of policy. Sharon founded Kadima before suffering a stroke in January that sent him into a coma.

The World Court has ruled all 145 settlements Israel has built on occupied territory illegal. Israel disputes this.

U S President George W Bush telephoned Olmert today inviting him to visit Washington once he forms a government. Olmert has said he would seek American approval for his unilateral plans.

President Moshe Katsav is expected to formally assign the task of putting together a government after consultations with parties on Sunday.

REUTERS