Fatah and Hamas agree that Abbas will lead Palestinian unity cabinet

The leaders of Fatah and Hamas yesterday agreed that Palestinian President Mahmoud Abbas could head an interim "unity" cabinet to pave the way for fresh future elections in Gaza and the West Bank.

The accord signed by Mr Abbas and Hamas political bureau chief Khaled Meshal in Qatar cleared one important obstacle standing in the way of the two factions working together and ending more than four years of enmity.

By providing for Mahmoud Abbas to take on the premiership of a jointly agreed "technocratic" cabinet, the deal will be seen as a an effort to produce a leadership acceptable to at least some foreign governments, while acceding to Hamas demands that the internationally respected Salam Fayyad stand down as Prime Minister.

Benjamin Netanyahu, the Israeli Prime Minister, swiftly reacted by saying it would be impossible to reach a peace deal with an Authority that included Hamas, adding, "it is either peace with Hamas or peace with Israel. You can't have them both."

Mr Fayyad, who has long said he would not be the reason for a breakdown in negotiations between the two factions, yesterday welcomed the agreement as "a response to the aspirations of our people to restore unity to the homeland and its institutions." But Mr Fayyad, who is not a member of either Fatah or Hamas, did not immediately say whether he would be part of the new cabinet, assuming it takes office.

Progress had hitherto been slow in negotiations to heal the schism which peaked when Hamas, which won the last parliamentary elections in 2006, seized control of Gaza by force in 2007, after the brief civil war which ended a short lived coalition between the two factions.

Mr Abbas has been depicted as warming to the idea of reconciliation with Hamas because of deep scepticism that current, badly faltering negotiations with Israel would lead to an agreement. But Palestinian analysts differed over how far the latest Hamas-Fatah deal would prove a defining breakthrough on the path to reconciliation.