New Palestinian government seeks space to function

GAZA, Sep 14 (Reuters) Hamas hopes a new Palestinian unity government will create enough ''wiggle room'' to draw EU countries on side and get international sanctions lifted, an aide to Prime Minister Ismail Haniyeh said today.

The new government, which would replace the Hamas-led administration that has run the Palestinian territories for the past six months, is currently being formed by Haniyeh of Hamas and President Mahmoud Abbas of Fatah.

While Hamas, an Islamist movement, would retain its position on issues like non-recognition of Israel, and Haniyeh is expected to remain as prime minister, Hamas hopes that the unity government will be regarded as more ''palatable'' to the West.

The United States and the European Union imposed financial sanctions on Hamas's government when it came to power in March because Hamas refused to recognise Israel, set aside violence and abide by existing peace agreements with the Jewish State.

''The margins for the (unity) government would be larger than for Hamas,'' Ahmed Youssef, the political adviser to Haniyeh, told Reuters, emphasising that Hamas would merely be a part of the new government, even if it is still an integral part.

The hope is that the appearance of greater latitude in the government's position will convince European nations that attitudes have changed and that sanctions can be lifted, even if the United States has shown that it remains skeptical.

''This is what we hope because if it doesn't succeed then the fate of the entire Palestinian Authority risks being blown on the wind,'' Youssef said. ''The new government is a government of all the Palestinians and Hamas is only part of it.'' ''TURN A BLIND EYE'' The sanctions have crippled the functioning of the government, which has been unable to pay salaries to most of its 165,000 workers for the past six months, exacerbating humanitarian problems for the 3.8 million Palestinians who live in the West Bank and Gaza Strip.

Public sector workers have gone on strike in the past week to protest the non-payment of salaries, putting Hamas under increasing pressure and prompting it to look for a solution to the predicament created by its rise to power.

Youssef said Palestinian leaders had received signals from the Europeans that they might be prepared to lift elements of the financial blockade if there are sure signs of change.

''Europe wants to restore calm in the region, firstly because it has interests here,'' Youssef said.

''But also because it does not want to repeat the experience of the United States, which won the enmity of Arabs and Muslims because of its hostile policies,'' he said.

Yet even if some European nations do decide to soften their stance, releasing aid and other financial assistance upon which the Palestinian Authority is dependent, there is no sure sign yet that the United States would follow suit.

''We do not hold much hope on the Americans,'' Youssef said.

''But they may at least turn a blind eye while the Europeans could resume the aid,'' he said.

REUTERS LL HS2109