Passage of Abbas plan unlikely to ease sanctions-UN

JERUSALEM, May 31 (Reuters) Passage of a Palestinian proposal on statehood that implicitly recognises Israel would not clear the way for lifting sanctions on the Hamas government but could be a positive step, a top UN diplomat said.

Alvaro de Soto, the UN special envoy for the West Asia peace process, also told Reuters in an interview today that he believed President Mahmoud Abbas's Fatah movement and Hamas Islamists were not on the brink of civil war.

The moderate Abbas, engaged in a power struggle with Hamas, last week stunned the group by giving it an ultimatum to accept a proposal that calls for negotiations leading to a Palestinian state alongside Israel or face a referendum in July.

De Soto called Abbas's move ''dramatic'', saying it could be a step in meeting international demands if it was embraced by the Hamas government and other conditions were met.

But when asked if passage of the referendum would clear the way for the West to restore aid to the government, he said: ''We are quite a ways from there right now ... We need to see what their position is on it, the position of the Palestinian Authority government,'' De Soto said in the first comments by a senior international mediator on a proposal drawn up by prisoners in an Israel jail.

Hamas is sworn to destroy Israel and has said talks with the Jewish state would be pointless. Abbas was elected by a landslide in early 2005 in a ballot Hamas did not contest.

De Soto noted most Palestinians favour a two-state solution to end conflict with Israel, but stressed the Quartet of West Asian peace mediators was clear in its demand that the government meet the three conditions set as the ''minimum threshold''.

''We very much hope that (things) will develop in the direction that will make the international donor community feel that they have an acceptable interlocutor in the Palestinian government,'' de Soto said.

TENSIONS De Soto said international proposals to pay only some Palestinian workers -- mainly in the health sector -- could fuel tensions unless major donors agreed to leave the door open to later expanding the mechanism to pay security forces and others.

Washington and other Western powers have cut aid to the two-month-old government over Hamas's refusal to recognise Israel, renounce violence and accept interim peace deals.

The Quartet, which comprises the United States, the European Union, Russia and the United Nations, is putting together an aid mechanism that would provide assistance directly to needy Palestinians while bypassing the government.

Because of U.S. and Israeli opposition to paying salaries to Palestinian government workers, the mechanism is expected to initially pay ''allowances'' only to health workers and possibly other social sector employees.

De Soto said the mechanism should have the flexibility to be expanded later to include other workers.

''You don't want security personnel going unpaid, you don't want any personnel going unpaid,'' de Soto said. ''The kind of fragmentation that would occur if some were paid and others were not paid -- I dread to the think of the consequences.'' The government's inability to pay salaries for three months and tensions with Abbas over control of the security forces have sparked internal violence and increased fears of civil war.

But de Soto said he saw signs that Hamas and Fatah had pulled back from full-scale confrontation despite clashes that have killed 10 people in Gaza this month.

''If they were near a civil war situation, I would say that the loss of life would be much higher. I don't think they are at the brink just now,'' de Soto said.

REUTERS SHB PC1710