Palestinian Prime Minister Ismail Haniyeh of Hamas announced the resignation of his Cabinet today, a formality that paved the way for the formation of a national unity government with Fatah. The move comes despite indications the US administration will continue to shun the Palestinian leadership.
Standing next to Palestinian President Mahmoud Abbas during the ceremony, Mr Haniyeh said a unity government would usher in a new era for the Palestinians.
Mr Abbas then authorised him to form a new coalition government.
Meanwhile, aides to Abbas said that US diplomats told them Washington plans to shun a future Hamas-Fatah coalition government because it will not explicitly recognize Israel.
State Department spokesman Sean McCormack said the US would not make judgments about the unity government before it is formed and has an official platform. The Bush administration also will watch the government's actions once it takes office, he said.
If the US decides to shun a new Hamas-Fatah government, it would be a severe blow to Abbas. The Fatah moderate leader has been trying to implement a power-sharing deal with Hamas to end Palestinian infighting and lift crippling international sanctions against the government.
Last week, the two political rivals reached a coalition agreement in Saudi Arabia, and the Hamas-led government was expected to resign later Thursday to pave the way for a unity government.
Washington had previously withheld judgment on the power-sharing deal.
Abbas' aides said he received word of the new US position in a phone call from Assistant Secretary of State David Welch late yesterday.
Jacob Walles, the US consul general in Jerusalem, then delivered the same message to Abbas in person today, the aides said, speaking on condition of anonymity because they were not authorized to discuss the issue.
While the US government said it would not deal with the coalition government, it would still maintain ties with Abbas and his office, his aides said.
Abbas planned to meet Saturday with Welch and Sunday with visiting Secretary of State Condoleezza Rice to try to change their minds, the aides said. Abbas and Israeli Prime Minister Ehud Olmert are also scheduled to hold a joint meeting with Rice on Monday.
Palestinian negotiator Saeb Erekat would only say that US officials have made it clear to the Palestinians that any government must adhere to the principles laid out by the so-called Quartet of Mideast mediators - recognise Israel, renounce violence and back previous peace deals with Israel.
The Saudi accord reached last week says only that the future government would "respect" past agreements.
Mr Erekat met with senior US officials in Washington last week to prepare for the three-way Mideast summit in Jerusalem on Monday. He also was involved in the meeting Thursday between Abbas and the US diplomat.
"The Americans reiterated their position that their relations with the government will depend on the government's compliance with the Quartet's principles," he said.
Yehia Moussa, a top Hamas lawmaker, said he was not surprised by the Abbas aides' comments of a US rejection of the deal.
"We expect the United States to lead an aggressive stance against us," he said.
Olmert told Turkish television that Israel was not happy with the coalition agreement. "I am not certain that the full scope of this agreement is clear to anyone, the initial signs are not very encouraging," he said.
However, he told reporters that he wanted to maintain ties with Abbas, who is widely known by his nickname, Abu Mazen.
"I am against cutting off ties with Abu Mazen," he said. "Abu Mazen was elected directly and his authority derives from this. I don't see anything to deter a meeting with Abu Mazen. He is committed to the Quartet principles and the road map (peace plan)."
The Hamas government was set to resign after last-minute demands by the militant group had been resolved, said Ziad Abu Amr, an independent who is expected to serve as foreign minister in the new Cabinet.
The power-sharing deal brokered last week in Saudi Arabia cleared the way for the formation of a Hamas-Fatah coalition. It seeks to end a deadly power struggle centered in Gaza that has killed more than 130 people since May, injured hundreds and caused millions of dollars in damage.
Palestinian officials hoped the deal would also lead to a lifting of international sanctions that were imposed on the government after Hamas' election last year.
But foreign governments said they would wait to study the agreement and to see if the new government had the will - or ability - to prevent ongoing attacks on Israel, including rocket attacks from the Gaza Strip.