Hamas says new government won't recognise Israel

GAZA, Nov 14 (Reuters) The ruling Islamic group Hamas today said a planned Palestinian unity government would not recognise Israel or accept a two-state solution to West Asia conflict as demanded by Israel and the United States.

The stance could undercut Palestinian efforts to ease a Western economic boycott by forming a unity cabinet more acceptable to the West.

The United States and its partners in the Quartet West Asia mediators imposed the boycott to pressure Hamas, which took office in March, to recognise Israel's right to exist, renounce violence and accept existing peace deals.

A US-educated Palestinian academic, Mohammad Shbair, is the top candidate to replace Prime Minister Ismail Haniyeh of Hamas as part of the proposed unity government.

Yuval Diskin, head of Israel's Shin Bet security service, said Hamas would benefit under the arrangement because it would continue to exert control from behind the scenes while skirting responsibility for the outcome of the new government's policies.

''I am against a unity government on the Palestinian side. I do not view this as a good thing for Israel,'' Diskin told Israeli lawmakers according to a parliamentary source. ''On the one hand Hamas would rule. On the other hand it will remove itself from all pressures and continue to solidify itself.'' Diskin said Israel should be prepared to widen its military operations in Gaza because of the growing strength of Hamas and other militant groups.

'WE REJECT THE TWO-STATE SOLUTION' Hamas spokesman Fawzi Barhoum said the programme of the proposed unity government between Hamas and Palestinian President Mahmoud Abbas's Fatah faction ''will not recognise Israel and will not include accepting the two-state solution.'' ''We reject the two-state solution, which is the vision of US President George Bush, because it represents a clear recognition of Israel,'' Barhoum said.

''Our position in this regard remains unchanged. We reject joining in any government that recognises Israel.'' The United States and the European Union regard Hamas as a terrorist organisation and have cut off direct aid to its administration. As a result, the Palestinian government has largely been unable to pay its 165,000 workers since April.

Frequent flare-ups in fighting in Gaza between forces loyal to Hamas and Fatah have fuelled fears of civil war.

Previous attempts to form a unity government have stalled because Fatah and Hamas, whose charter calls for Israel's destruction, could not agree on language for a platform that satisfies both Hamas and Western powers.

The United States and Israel have demanded that the new government adopt a platform that meets the Quartet's conditions.

The Quartet is composed of the United States, the EU, Russia and the United Nations.

''We expect the new Palestinian government to recognise the three principles set by the Quartet so we can move forward in the region,'' Zehavit Ben Hillel, a spokeswoman for Israel's Foreign Ministry, said.

Abbas's aides say he will insist on a political programme that explicitly endorses interim peace deals with Israel and a two-state solution to the conflict.

Some Hamas officials have said the new government's platform might be left vague, but it is unclear whether that will satisfy Israel and the United States.

A senior Fatah official said the unity government agreement would give Hamas 10 ministries, including the prime ministership. Fatah would get six ministries and independents would lead five.

The groups agreed the cabinet will not include ''leading or prominent figures'' from Hamas or Fatah, the Fatah official said.

Shbair, the former head of the Islamic University in Gaza, is considered close to Hamas but is not a member of the group.

REUTERS SY RAI2224