Mahmoud Abbas, the Palestinian President, is due to travel to Gaza tomorrow to open talks with the Hamas leadership on the formation of a "national unity" coalition government which would include ministers from the defeated Fatah.
Mr Abbas initiated contact with Hamas before more than 1,000 Fatah activists - including around 100 armed men - burnt cars last night and staged an angry demonstration outside the Legislative Council building, demanding the resignation of top officials in the organisation, and rejecting a coalition with Hamas.
The move came as a senior politician liaising between Hamas and the Palestinian President predicted that the armed Islamic group would "try to mend fences with the international community" in an attempt to stave off the continuing threat that the US and the EU will cut off funding to the Palestinian Authority if Hamas takes its place in its cabinet.
Israel added to the funding threat faced by the PA yesterday when Yossi Bachar, the director general of the Finance Ministry, suggested that the customs duties and VAT it collects for the Palestinians might be withheld from the authority after Hamas's election victory. Mr Bachar told the World Economic Forum in Davos: "We will face practical problems of how you deal with people that call for the destruction of Israel. If they want to continue to work with us, they will have to find a solution, otherwise I can't see how they would get the money."
And the US Consul General in Jerusalem, Jacob Walles, threatened to withhold funding from Hamas-controlled ministries in a new Palestinian government if the faction failed to renounce militant violence.
Pressure on Hamas to end the commitment in its charter to the destruction of Israel also increased when Amr Moussa, Secretary General of the Arab League, said that Hamas would have to accept the 2002 Beirut initiative which requires full Arab recognition of Israel in return for Israel's withdrawal from territories occupied since the Six Day war in 1967.
The demonstration in Gaza City, a sign of both the urgency and the difficulty of the task Mr Abbas faces in persuading Fatah to join such a coalition, was one of a series in which Fatah members rallied to protest at the party's stinging defeat in Wednesday's election.
Samir Mashrawi, a leading Fatah candidate in Gaza who was himself defeated on Wednesday, said at the scene: "This demonstration is a natural reaction of Fatah supporters and members. We have one demand, that the (Fatah) central committee and the Revolutionary Council should resign immediately."
While Hamas itself generally refrained from victory demonstrations here throughout the day, witnesses reported that three people had been wounded during an exchange of gunfire between the two factions in the southern town of Khan Yunis after thousands of Hamas supporters waving green banners held a large celebration rally in the town's refugee camp.
In Ramallah, Mr Abbas told reporters: "We are consulting and in contact with all the Palestinian groups and definitely, at the appropriate time, the biggest party will form the cabinet."
Hamas leaders said they wanted a meeting with Mr Abbas tomorrow to discuss the formation of a new government.
Ziad Abu Amr, a leading Gaza independent politician who was elected to the Legislative Council with Hamas support and spoke with both the faction and Mr Abbas yesterday, said that he had urged both sides to reach a speedy conclusion on the new government. He predicted that Hamas's clear preference would be for a "national unity government" - which would probably include Fatah as well as independent members.
Acknowledging that many within Fatah currently opposed such a coalition because they were "bitter" over the organisation's defeat on Wednesday, he added: "This is a minority with 43 out of 132 seats. There is a new political reality which Fatah as well as Hamas has to face."
Dr Abu Amr yesterday stopped well short of suggesting that Hamas would produce an early declaration of recognition of Israel. But he suggested that the faction might commit itself to prolong indefinitely the ceasefire with Israel.
He also suggested Hamas might be in a position to enforce the ceasefire more effectively than the PA had previously done - including controlling factions which have ignored it, such as Islamic Jihad. "If they are in control, then this is their mandate, to preserve law and order," he said.
Palestinian political sources pointed out yesterday that while the position of Mr Abbas, who is committed to a negotiated two-state solution of the conflict with Israel, has on the face of it been weakened by Hamas's success, he is in a position to make at least some demands of Hamas because of the implicit threat that he could resign - a seriously destablising outcome which Hamas is currently as anxious to prevent as the US and Israel.
Haniya, the brain of the campaign
Ismail Haniya, a senior Hamas leader and the head of its "Change and Reform" parliament list, is seen as a pragmatist and moderate.
Mr Haniya rose to political prominence as a close associate of Hamas' spiritual leader, the late Sheikh Ahmed Yassin, whose office he ran. Other Hamas figures are considered more senior, but Mr Haniya was chosen to lead their astonishing election campaign.
In September 2003, Mr Haniya and Sheikh Yassin escaped an Israeli air strike on an apartment block in Gaza City. They heard the approaching aircraft and left the building seconds before the bomb struck. Six months later, Sheikh Yassin was killed by Israeli helicopter gunships as he left a mosque after dawn prayers.
Mr Haniya, 43, a refugee from al Jora in Ashkalon, was a political activist at the Islamic University in Gaza, and spent three and a half years in prison in the 1980s and 1990s for running Hamas' security wing. In April 2004, after Israel killed Sheikh Yassin's successor in Gaza, Abdel-Aziz Rantisi, sources said Hamas secretly appointed Mr Haniya to "collective leadership".
Hardliner insists on no talks with Israel
Mahmoud al-Zahar, 54, a former personal doctor to Sheikh Yassin and founding member of Hamas, has been described as a hardliner. He is thought to have secretly succeeded Abdel Aziz al-Rantisi as the Hamas leader in Gaza in April 2004.
Mr Zahar has personal reasons to be angry with the Palestinian Authority and Israel. Palestinian security interrogators shaved his beard and broke four of his ribs in a Palestinian prison in 1996, while last year, an assassination attempt while he was in his house in Gaza left him with head and back wounds - and killed his son and body-guard.
These incidents, among others, have perhaps led to Mr Zahar's hardline stance on the peace process with the Israelis. He continues to maintain that there can be no negotiation with or recognition of Israel.
His membership of Hamas led to him spending six months in an Israeli jail in 1988. The author of five books, including one novel, Mr Zahar was expelled to Marj al Zehour in Lebanon for a year in 1992.
During the recent election campaign, Mr Zahar was number nine on the party's list of 62 candidates.
Additional reports by Said GhazaliReuse content