Gaza celebrates unity deal, world reaction cautious

GAZA, Feb 9 (Reuters) Palestinians today celebrated a coalition deal between Hamas and Fatah to end factional warfare, but Israel insisted the Islamist Hamas group must recognise the Jewish state and international reaction was cautious.

Gaza residents crowded into streets which just a week ago saw bloody battles between rival gunmen, hoping the accord would succeed where others had failed by finally curbing bloodshed and ending international sanctions imposed a year ago.

''I bought sweets, even though I needed the money for something else, but I am optimistic that after the agreement the siege will be lifted and we will be paid regularly,'' said 26-year-old government employee Ahmed Yusri.

There was a muted international reaction to the accord sealed in Saudi Arabia between Palestinian President Mahmoud Abbas and Hamas chief Khaled Meshaal late yesterday.

The United States, which spearheaded the economic sanctions, was silent but some European states reacted more positively.

The agreement made no mention of recognising Israel, a requirement laid down by the Quartet of West Asia peacemakers for the lifting of sanctions imposed on the Palestinian Authority after Hamas trounced Fatah in elections last year.

However a letter from Abbas, re-appointing Ismail Haniyeh of Hamas as prime minister, called on Hamas to ''abide by the interests of the Palestinian people'', and linked that to previous Palestine Liberation Organisation decisions.

Palestinian analyst Hani Habib said both Fatah and Hamas had been forced to make concessions by two months of violence in which 90 Palestinians have been killed.

Abbas's reference to existing Palestinian and Arab accords was significant, he added. ''These decisions clearly imply a recognition (of Israel).'' But Israel's Yedioth Ahronoth mass-circulation newspaper said: ''Hamas did not relinquish power, abandon its ideology, did not recognise Israel, did not renounce terror and did not agree to abide by signed agreements.'' FRENCH BACKING The European Union, which along with the United States, United Nations and Russia make up the Quartet, today said it would study the Mecca deal ''in a positive but cautious manner''.

France welcomed the agreement and said the international community should back the new government. Britain described the accord as ''interesting''.

The Quartet has said Israel must renounce violence, recognise Israel and commit itself to existing peace accords before sanctions can be lifted.

A Hamas official, speaking yesterday, appeared to suggest the movement was expecting U S rejection but was betting on European and Arab support.

Israeli government spokeswoman Miri Eisin said the new Palestinian government must accept all three Quartet demands.

Israeli Prime Minister Ehud Olmert is scheduled to meet U S Secretary of State Condoleezza Rice and Abbas on February 19 in what has been billed as a bid to restart long-stalled peace talks.

But the meeting could be in doubt if Israel and the United States say the wording of the unity deal does not go far enough.

REUTERS SY RN1558