Palestinian PM says close to agreeing unity govt

GAZA, Sep 11 (Reuters) Palestinian Prime Minister Ismail Haniyeh of Hamas said today he was close to agreeing a unity government with President Mahmoud Abbas, which Palestinians hope will lead to a lifting of Western sanctions.

''We are going ahead to form a national unity government,'' Haniyeh told players from the Palestinian national soccer team.

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

They also fear a return to the violent power struggle that followed the militant movement's defeat of Abbas's rival Fatah faction in January elections if the unity talks collapse.

Asked by reporters when an announcement of a unity government would be made, Haniyeh said: ''Hopefully in the nearest time possible.'' He described late-night talks yesterday in the Gaza Strip with the moderate Abbas as ''positive and fruitful''.

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

But Fatah officials said a breakthrough had been Hamas's willingness to accept UN resolutions relating to the West Asia conflict and decisions from previous Arab summits.

For Hamas to do so would effectively mean recognising the Jewish state. Hamas officials declined to comment, saying talks on such issues were continuing.

ACTING GOVERNMENT 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.

A senior Palestinian official, speaking on condition of anonymity, has said the current government could be reclassified as an ''acting government'' as soon as Monday, and would retain that title until a new unity administration was formed.

Haniyeh said Hamas had nominated him to head any unity government.

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

Abbas has 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.

Western countries are unlikely to end aid restrictions unless Hamas explicitly softens its stand on Israel.

Abbas and Haniyeh were expected to meet again on Monday, said Hamas spokesman Sami Abu Zuhri.

In June, after inter-factional fighting heightened fears of civil war, Hamas and Fatah negotiated a unity agreement based on a document drafted by Palestinian prisoners in Israeli jails.

But differences remained over recognition of Israel and neither Abbas nor Hamas pursued unity government moves.

Fatah seeks a Palestinian state in Gaza and the occupied West Bank, land which Israel captured in the 1967 West Asia war. Hamas wants to replace Israel with an Islamic state.

Reuters BDP VV1700