RAMALLAH, West Bank - A high-profile meeting between the leaders of the rival Fatah and Hamas movements has been called off, Palestinian officials said Sunday, dealing a new setback to efforts by the two sides to end a bitter rift and form a unity government. The announcement signaled the reconciliation agreement, announced last month at a festive ceremony in Egypt, could face deep trouble in the coming months as the sides try to implement the deal. Tuesday's meeting between Palestinian President Mahmoud Abbas and Hamas leader Khaled Mashaal had been meant to finalise an agreement on who would be the prime minister of the new government. But officials on both sides acknowledge the gaps remained wide. "It's known that there are still differences," said Azzam al-Ahmed, the chief Fatah negotiator. "We will be in contact over the coming days to agree on a new date." Abbas has proposed keeping his current prime minister, Salam Fayyad, in the post. Fayyad, a US-educated economist, is well respected internationally and seen as critical in persuading Western donor nations to continue funneling hundreds of millions of dollars in aid to the Palestinians. The West has branded Hamas a terrorist organisation, and in Fayyad's absence, donors would want strict assurances that money is not reaching the group. Although Fayyad is a political independent, Hamas says he is too closely allied with the West and must be replaced with a less identified figure. Some elements in Fatah also oppose Fayyad, believing his success in building up West Bank institutions has overshadowed Abbas. Officials close to Fayyad said he is considering pulling himself out of the running. They said Fayyad feels that he is being used by both sides. The officials spoke on condition anonymity because Fayyad has not made a final decision. It was not clear whether he was serious about withdrawing from consideration or trying to put pressure on the factions to approve his candidacy. In Gaza, the prime minister of the Hamas government, Ismail Haniyeh, tried to put a positive spin on the dispute. "This is an indication of the seriousness of the debate on the formation of the coming government and the divergence of views on the name of the next prime minister," he said. "Therefore, the issue needs further discussion." The Egypt-brokered reconciliation agreement seeks to end the rift that has left the Palestinians divided between rival governments since Hamas overran the Gaza Strip in June 2007. Hamas rules Gaza and Abbas' Fatah-dominated Palestinian Authority governs the West Bank. The Palestinians hope to establish a state in both territories, located on opposite sides of Israel, with east Jerusalem as the capital. Under the deal, the factions pledged to form a single government comprised of apolitical technocrats to lead the Palestinians until elections next year. Selecting a prime minister is just one of several issues likely to plague the reconciliation process in the coming months. Hamas maintains a powerful army in Gaza and has made clear it has no intention of disarming its militia. Abbas has repeatedly said the Palestinians must have a unified security force to gain independence. On Saturday Haniyeh said in a speech that a national security service could not cooperate with Israel. "A national strategy to defend the weapons of resistance must be established," he said. Abbas favours a negotiated peace deal with Israel, while Hamas is sworn to Israel's destruction. Israel has warned Abbas it will not negotiate with any Palestinian government that includes Hamas, and instead urged Abbas to resume peace talks.
