Abbas says deal reached on Palestinian unity govt

GAZA, Sep 11 (Reuters) Palestinian President Mahmoud Abbas and Prime Minister Ismail Haniyeh of Hamas today reached a deal to form a unity government that the Palestinians hope will end their international isolation and revive aid.

''We have finalised 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 on Palestine TV with Haniyeh sitting next to him.

Palestinians hope the creation of a unity coalition will lead to the lifting of a Western aid embargo imposed on the six-month-old Hamas government for refusing to recognise Israel.

Hamas, whose charter calls for Israel's destruction, has so far resisted international pressure and calls by the moderate Abbas to soften its policy towards the Jewish state.

It was unclear if the militant Islamist movement had explicitly changed its position.

Israel said the new government could create momentum for peacemaking if it recognised Israel, renounced violence and ensured the release of a soldier abducted by militants in June.

Foreign Ministry spokesman Mark Regev said if the government met these conditions ''this would open the door to accelerated talks and create new momentum in the peace process''.

Hamas took office in March after a surprising win over Abbas's Fatah movement in January parliamentary elections.

Fatah officials had earlier said a breakthrough in talks after weeks of fruitless negotiations had been Hamas's willingness to accept U.N. resolutions relating to the Middle East conflict and ecisions from previous Arab summits.

For Hamas to do so would effectively mean recognising the Jewish state. Hamas officials have declined to comment.

While Europe has backed efforts to form a unity government, British Prime Minister Tony Blair said on Sunday any new administration would have to accept explicit Western conditions for restoring aid -- recognising Israel, renouncing violence and accepting interim peace deals.

U.S. officials have warned Fatah it would be shunned like Hamas if it joined a government that did not accept the conditions.

CALL TO END STRIKES Haniyeh, who has held talks with Abbas in the Gaza Strip since Sunday, had earlier said an agreement was near.

''This agreement was expected because the intentions were honest and sincere,'' Haniyeh said on Palestine TV.

''This government will work to protect the interests of our people and will achieve its goals in establishing a Palestinian state, independent and sovereign, with Jerusalem as its capital.'' Fatah seeks a Palestinian state in Gaza and the occupied West Bank, land which Israel captured in the 1967 Middle East war. Hamas wants to replace Israel with an Islamic state and Haniyeh did not elaborate.

Besides suffering under the aid embargo, Palestinians had feared a return to the violent power struggle that followed Hamas's election win if unity talks had failed.

The Hamas administration has come in for increasing criticism in recent weeks, including strikes by doctors and teachers throughout the Palestinian territories who are angered by the non-payment of salaries for the past six months.

Both Abbas and Haniyeh urged an end to the stoppages.

Abbas had also come under pressure from some Fatah loyalists as well as the United States and Israel to sack the government and form a new administration of technocrats.

Reuters BDP DB1822