MIDDLE EAST: Hamas faces forming a new Palestinian government alone after its failure to convince President Mahmoud Abbas's Fatah faction and other more moderate parties to join it in a ruling coalition.
The militant Islamic movement had hoped to form a government of national unity to ease intense international pressure over its anti-Israeli stance in the wake of its surprise victory in January's elections.
However, coalition talks foundered after Hamas's refusal to meet demands by Fatah and other groups to accept past interim agreements with Israel and to recognise the Palestine Liberation Organisation, headed by Mr Abbas, as the sole legitimate representative of the Palestinian people.
Hamas leaders refused to recognise any agreements which would mean accepting Israel's 38-year-long military occupation of Palestinian land. The group is due to give the list of its cabinet members to Mr Abbas when he visits Gaza today.
Hamas remains officially sworn to the destruction of the Jewish state and has remained defiant in the face of international demands for it to renounce violence, accept past agreements and recognise Israel.
Israel refuses to negotiate with Hamas and has cut crucial monthly tax transfers to the Palestinians in response to the electoral success of Hamas, a move which violates signed agreements.
The EU, Israel and the US regard Hamas as a terrorist organisation, with the EU and the US considering cutting crucial aid to a Hamas-led government.
In an attempt to avert the collapse of the already stricken Palestinian economy, donor countries have been examining ways to continue paying the salaries of the 140,000 Palestinian Authority (PA) employees while bypassing Hamas.
The World Bank this week warned that the worst outcome of international aid cuts would be a 30 per cent drop in personal incomes this year and the prospect of three-quarters of Palestinians living in poverty by 2008.
Analysts say that Hamas will face difficulties in implementing its election pledges of much-needed internal reforms and restructuring without the participation in government of Fatah, which was roundly defeated by the Islamists in January's election.
"I don't think it's the best formation of government," said Dr Ali Jarbawi, a political scientist at Bir Zeit University near Ramallah. "A more stable government would be with the other factions. It's going to be extremely difficult for Hamas to weather the problems ahead. We are going to have a few tough weeks or months ahead of us for Hamas and Palestinians in general."
The decision by Fatah's ruling central committee not to join a Hamas-led government comes amid calls for the entire PA to be dismantled in the wake of this week's audacious Israeli siege of a Palestinian jail in Jericho in which it snatched inmates it accuses of murdering a former cabinet minister.
The raid significantly boosted the electoral prospects of Israel's acting prime minister, Ehud Olmert, ahead of Israeli national elections this month, but it was perceived by many Palestinians as a deliberate attempt to humiliate Mr Abbas, whom Israel has already sidelined as a peace partner.
Several top Fatah officials have taken the unprecedented step of calling on Mr Abbas to resign, dissolve the PA and return responsibility for the occupied territories to Israel in protest at the Jericho prison raid and ongoing unilateral Israeli policies.
Fatah members say that the dissolution of the PA - the quasi government of the West Bank and Gaza - would be timely because Israel has already marginalised the authority by forging ahead with its unilateral policy of fixing its borders with an emasculated Palestinian entity entirely on its own terms.