What is the latest?
President Mahmoud Abbas says unity talks with Hamas are dead and has suggested he might dismiss the Islamist government. Fighting between Hamas and Abbas's Fatah faction has subsided since clashes last week killed 15 Palestinians. But a war of words continues and there appears little chance unity talks will get back on track. Abbas went to Gaza on Monday to meet Qatar's foreign minister, who is presenting a new plan for a unity coalition. Some Palestinian officials say the proposal includes recognition of Israel, making it unacceptable to Hamas, which is sworn to destroying Israel.
What is the problem?
The crux of the problem has been agreeing on language for a unity platform that gives Hamas "wiggle room" on recognition of Israel, but goes far enough to persuade international donors to ease an aid embargo on the government. Hamas will not accept anything that explicitly confers recognition of Israel. Abbas has not sought direct recognition, but asked Hamas to honour interim peace deals with Israel. Hamas says it will abide only by agreements in the "interest of the Palestinian people", thus allowing it to reject past deals such as the 1993 Oslo peace accords.
What happens next?
With Hamas unlikely to compromise, it will be up to Abbas to make good on his threats. He has been resisting pressure from Washington for months to sack the government of Ismail Haniya, the prime minister. Abbas's aides want him to call fresh elections, something Hamas says would be illegal. Abbas dislikes confrontation and may opt to let the embargo continue to squeeze Hamas while allowing Western funds to pass through his office to pay partial government wages. Economic conditions would be expected to keep worsening, which could lead to popular pressure for elections as a way to lift sanctions.
How real is the threat of civil war?
Both sides are beefing up. With US backing, Abbas's elite presidential guard has grown to 3,500-4,000, from 2,500 members when Hamas took power in March. A US-drafted plan calls for increasing that number to 6,000. Hamas says its own "Executive Force" has grown to 5,600 men, up from 3,000 in May when it was created over Abbas's objections. Palestinian leaders say civil war is a "red line" they will not cross because it would divert from their struggle against Israeli occupation. But the violence last week, following internal fighting earlier this year, leaves open the possibility of major bloodshed, especially if Abbas sacks Haniya.