In the face of growing international and Israeli pressure to shun Hamas, Palestinian leader Mahmoud Abbas will insist the group accept his goal of reaching a peace agreement with Israel if it wants to take power, Palestinian officials said.

Abbas' demands set the stage for a possible showdown between Hamas and Abbas, whose Fatah Party was routed in last month's legislative election. A Hamas leader expressed confidence a compromise would be reached.

The Israeli campaign against Hamas is focused on bringing the perpetually cash-strapped Palestinian Authority to its knees by drying up desperately needed income.

Barring access to Israel would be devastating to the already battered Gaza economy, which depends heavily on exports to Israel.

The Israeli market is the largest for the impoverished coastal strip, and most of Gaza's exports to the rest of the world go through Israeli ports.

Economic warfare

Additionally, Israel would bar Gaza labourers from reaching jobs in the country, stripping thousands of families of their main sources of income. About 4000 Gazans are allowed into Israel each day, according to the army, and several thousand others are believed to be in the country illegally.

"The swearing-in of the Palestinian parliament on Saturday rings a gong for us," Defence Minister Shaul Mofaz told a meeting of high-level security and government officials on Thursday.

Israeli has ruled out any dealings
with the Islamist Hamas

"A Hamas government will mean an authority of terror and murder," he said, according to meeting participants.

The measures, which are expected to be approved by acting Ehud Olmert, the Israeli prime minister, on Friday, would go into effect beginning on Sunday, officials said.

They are part of a broader effort by Israel to isolate Hamas internationally and put heavy economic pressure on the group.

Israel has ruled out any dealings with Hamas, which has killed hundreds of Israelis in suicide bombings, until it abandons its violent campaign to destroy Israel.

On Wednesday, government officials said Israel was likely to halt crucial monthly tax transfers to the Palestinians, though it would not immediately block millions of dollars in humanitarian aid that moves through Israeli banks.

Customs duties

Israel annually transfers about $600 million in taxes and customs duties it collects for the Palestinians.

The transfers are crucial for the Palestinian Authority to pay salaries to 140,000 government workers - 40% of whom work for the security forces and are armed.

"The world should realise that more pressure on the Palestinian people will create more tension and everyone is going to be a loser, including Israel"

Shaul Mofaz,
Israeli Defence Minister

"Israel will not transfer money to a terrorist authority," Tzipi Livni, the Israeli foreign minister, told Israel Radio on Thursday.

"(But) we have to look at things logically and decide how to differentiate between a terrorist authority and causing a humanitarian crisis."
 
Mushir al-Masri, an incoming Hamas lawmaker, condemned the Israeli economic threats. "This is collective punishment on our people who have practised their democratic right to choose their representatives," he said.

"The world should realise that more pressure on the Palestinian people will create more tension and everyone is going to be a loser, including Israel," al-Masri said.
 
Hamas' unexpected routing of the long-ruling Fatah Party in 25 January's Palestinian parliamentary balloting, and its subsequent refusal to abandon its violent ways, has provoked Western threats to withhold hundreds of millions of dollars in desperately needed aid.

Overwhelming pressure

Responding to the overwhelming pressure, Abbas plans to call on Hamas to allow him to proceed with peace efforts and to accept existing agreements between Israel and the Palestinians, senior Palestinian officials said on Thursday.

"We are sure that the new government will be in harmony with the PLO charter, and the signed agreements with Israel," Nabil Abu Rudeineh, Palestinian presidential aide, said.

Livni: Israel will not transfer any
money to a terrorist authority

Abbas is expected to deliver his demands during a speech on Saturday marking the first session of the newly elected, Hamas-dominated Parliament.

Abbas' speech is likely to be the beginning of a drawn-out negotiating process with Hamas. Once Abbas taps them to form a new cabinet, the group will have five weeks to put together its government.

Abbas could then decide whether to accept or reject the cabinet's composition. "We are really going to have a showdown and a major crisis," said Saeb Erekat, a Fatah lawmaker and outgoing chief negotiator with Israel. "If he wants to activate his presidential powers, he will have to sack them."

If Hamas refuses to change, Abbas could ask another group to form a government. That, in turn, would almost surely precipitate a parliamentary crisis, with the Hamas-led legislature likely rejecting the new choice.

Compromise

Al-Masri, the incoming Hamas lawmaker, said his group is confident a compromise will be reached. "I think that always we can find common understandings," he said. "All of us are shouldering joint responsibility to serve the interests of our people."

Hamas officials have signalled they would support a long-term truce with Israel and accept existing agreements with Israel that serve Palestinian interests.

Israel has dismissed Hamas' conditional acceptance as disingenuous. Hamas has so far refused to renounce violent resistance or recognise Israel.