The Gaza-based Islamist group Hamas and President Mahmoud Abbas' Palestine Liberation Organisation (PLO) agreed yesterday to implement a unity pact, both sides announced in a joint news conference.
The move envisions forming a unity government within five weeks and holding national elections six months after a vote of confidence by the Palestinian parliament.
"An agreement has been reached on the formation within five weeks of an independent government headed by President Mahmoud Abbas," said the statement, read out by Hamas' Gaza prime minister, Ismail Haniya, in front of a visiting delegation from the Palestine Liberation Organisation.
Hamas has repeatedly battled Israel, which it refuses to recognise. Before the announcement, Israeli Prime Minister Benjamin Netanyahu cautioned Abbas over the unity efforts, saying he had to choose between peace with Israel or with its Islamist enemy.
Abbas' Fatah party has remained in control of the Palestinian Authority in the occupied West Bank and pursued troubled peace talks with Israel, which are set to expire next Tuesday.
The agreement was reached in talks in Gaza City which continued into the early hours of the morning between Hamas leaders and a PLO delegation headed by Azzam al-Ahmad, a senior figure in the Fatah movement.
The rival sides have announced several times before that they would make way for a unity government of technocrats only for it to fail to materialise.
"People have heard the same thing over and over again and each time the agreement had been broken by either Fatah or Hamas," said Samir Awad, politics professor at Birzeit University in the West Bank.
Analyst Hani al-Masri said: "This reconciliation has hardly any substance on the ground. It could collapse at any moment.
"Reconciliation [between the Palestinian factions] and negotiations [with Israel] are now just tactics - each side has its own calculations."
The latest announcement of a deal came as US-brokered peace talks teetered on the edge of collapse.
Netanyahu said it showed Abbas was not serious about 11th-hour efforts to salvage US-brokered peace negotiations.
"Instead of moving into peace with Israel, he's moving into peace with Hamas," Netanyahu said. "He has to choose. Does he want peace with Hamas or peace with Israel?
"You can have one but not the other. I hope he chooses peace. So far he hasn't done so."
But Palestinian chief negotiator Saeb Erakat countered that peace with Israel was impossible without Palestinian unity.
"We can't reach peace without reconciliation first," he said.
Erakat held yet another meeting with his Israeli counterpart Tzipi Livni and US envoy Martin Indyk on Tuesday in a bid to salvage the peace talks, which are due to wrap up next Tuesday if there is no agreement on their extension.
"The meeting lasted several hours but we did not manage to overcome our differences," Erakat said.
"We will continue to meet the Israeli delegation up to April 29 but clearly the Israelis don't want to move the peace process forward."
Abbas has said he will extend the negotiations only if Israel frees a batch of Arab prisoners previously earmarked for release, freezes settlement building in the West Bank, including annexed east Jerusalem, and agrees to discuss the borders of a future Palestinian state. But Netanyahu accused him of setting impossible terms.
Just hours after the unity announcement, Israeli jets hit the northern Gaza Strip, wounding three people. Medical official Ashraf al-Kidreh said the air strike targeted two men riding a motorcycle, but that the missile missed its target and wounded three bystanders.
Agence France-Presse, Reuters, Associated Press, Bloomberg