Gaza (AsiaNews/Agencies) – Palestinian President Mahmoud Abbas announced in Gaza that an agreement had been reached over the programme of the new national unity government, a development confirmed by Prime Minister Ismail Haniyeh. The agreement, which is thought to include an implicit recognition of Israel, calls for a coalition between Hamas and Fatah. This will enable the Palestinians to have sanctions imposed by the United States and the European Union lifted following the Islamist Hamas's victory in the January 28 election.

Despite being forced to form a government with the 'moderate' Fatah, the more 'radical' Hamas is demanding the top post of Prime Minister in the new cabinet. Spokesman Sami Abou Zouhri said that current PM Haniyeh should succeed himself.

Hamas's decision to make concessions comes as the economy of the Palestinian territories is in a free fall because of the sanctions.

The Hamas government, unable to pay salaries in the last six months to its more than 100,000 public servants, was faced with a series of strikes that left schools closed, left garbage uncollected and saw policemen join in the protest.

The agreement should include an indirect recognition of Israel, a necessary if economic sanctions were to be lifted.

The new government is expected to sign up to the 2002 Arab peace initiative, according to Hamas officials cited in Haaretz.

Fatah officials are quoted in the Israeli daily that a breakthrough was made possible by Hamas' willingness to accept United Nations resolutions relating to the Middle East conflict and decisions from previous Arab summits, which include the normalisation of relations with Israel once the occupied territories are evacuated.