Olmert, Bush may shun Palestinian govt -Israel

JERUSALEM, Feb 18 (Reuters) US President George W Bush and Israeli Prime Minister Ehud Olmert have agreed to shun a Palestinian unity government unless it meets international conditions, an official in Olmert's office said yesterday.

The Bush administration insisted it would wait until a government was formed before making a judgment and US Secretary of State Condoleezza Rice was due to meet Olmert and Palestinian President Mahmoud Abbas tomorrow in Jerusalem to try to revive stalled peace talks.

Abbas said the power-sharing agreement between Fatah and Hamas was ''the best we could get.'' But the Israelis said the meeting would focus instead on disagreements over Abbas' deal for a coalition of his Fatah movement with the militant Hamas group.

An official in Olmert's office told Reuters the agreement with Bush over a joint position toward the Palestinian government was reached in a telephone conversation on Friday between the two leaders.

''We won't recognize a unity government that doesn't explicitly accept the conditions. This is the joint US-Israeli position,'' the official said, confirming Israeli television reports.

Rice, who arrived in Jerusalem after a surprise trip to Baghdad, told reporters a decision had not yet been made on how to deal with a unity government.

In Washington, White House spokesman Alex Conant said, ''We will await the formation of the government before making any decisions about it.'' In the unity deal reached in Saudi Arabia this month, Hamas made no explicit commitment to recognize Israel, renounce violence or accept interim peace deals as demanded by Israel and the quartet of West Asia mediators.

Abbas made clear he would not budge from the deal.

''This agreement was the best we could get. We cannot change it.

You either take it or leave it,'' a Palestinian official said of Abbas' message to Assistant US Secretary of State David Welch in preparatory talks in the West Bank city of Ramallah.

Rice said that despite problems surrounding the unity government, it was an important time for both sides to meet.

''If one waited for the perfect time to come to the Middle East then one would never get on the airplane,'' Rice said at a joint appearance with Israeli Foreign Minister Tzipi Livni.

Livni made clear Israel did not believe the deal between Hamas and Abbas was satisfactory.

''Unfortunately, before the formation of the future Palestinian government, the understandings do not meet the requirements of the international community,'' Livni said before the two met for dinner.

Rice will hold separate talks with Abbas and Olmert on Sunday before the three-way summit tomorrow.

A 'QUIET CHANNEL' Abbas' spokesman, Nabil Abu Rdainah, said the Palestinians hoped to convince the United States ''that this is the only possible agreement, that the government must be given a chance.'' Senior Abbas aide Saeb Erekat said Palestinians hoped the three-way summit would ''launch a quiet channel, as President Abbas has requested, to explore how to get to our objective of a Palestinian state.'' A letter from Abbas reappointing Ismail Haniyeh of Hamas as prime minister contains a vague call to Hamas to ''abide'' by Palestinian and Arab resolutions that include recognition of Israel, and to ''respect'' past agreements and international law.

Haniyeh said on Friday he hoped to form the government with Abbas' Fatah faction within three weeks.

Haniyeh yesterday launched coalition talks with members of two militant factions, Islamic Jihad and the Popular Front for the Liberation of Palestine.

The United States has struggled to maintain a united front within the quartet, which also includes the European Union, Russia and the United Nations.

Even if some Arab and European countries resume aid after a yearlong embargo of the Hamas government, Western diplomats said the impact would be limited.

Without US support, regional and international banks will be reluctant to resume transfers to the Palestinian government, Palestinian bank executives said.

REUTERS PKS PM0812