Livni: Hope for moderate Palestinian government

Haniyeh's statement Friday was the latest indication that the Islamic Hamas group was nearing a deal to form a national unity government with Palestinian President Mahmoud Abbas' moderate Fatah Party that would be made up of independent experts. Such a coalition would presumably present a more moderate face to the world and convince the West to restore hundreds of millions of dollars in international funding.

"When the issue of the siege is on one side, and my being prime minister is on the other, let the siege be lifted to end the suffering of the Palestinian people," Haniyeh said, referring to the sanctions that have caused widespread hardship in the West Bank and Gaza Strip.

Haniyeh's comments came a day after Abbas spoke on the phone with his main political rival, Hamas' politburo chief Khaled Mashaal - their first conversation since April. Hamas spokesman Fawzi Barhoum said their discussion indicated the sides were nearing agreement.

The international sanctions, including tax revenues Israel has withheld since Hamas took power in March, has made it largely impossible for Hamas to pay the government's 165,000 employees.

The West, including the United States, has said it will not lift sanctions unless Hamas recognizes Israel, renounces violence and accepts past peace deals, something Hamas has so far refused to do. The program of the proposed new unity government is vague on the key issue of recognizing Israel, calling for a Palestinian state on only the lands captured by Israel in the 1967 Mideast War. Hamas' charter calls for an Islamic state on those lands as well as Israel.

In addition to the economic sanctions, Palestinians in Gaza have weathered a months long Israeli offensive that began after Hamas terrorists tunneled into Israel and captured a soldier in June.

More than 50 people have been killed in recent days in the Israeli artillery barrage, which aimed at preventing Palestinian militants from firing rockets at Israel. Among them were 19 killed Wednesday in the northern Gaza Strip town of Beit Hanoun when shells landed as residents were sleeping.

Israel hopeful for moderate Palestinian government

Israel's minister of foreign affairs welcomed news on Friday that Palestinian Prime Minister Ismail Haniyeh from Hamas may step aside and allow the Palestinian Authority to form a moderate government willing to work with Israel.

"There is hope for the moderates, those who believe in the two-state solution," Tzipi Livni, who is also deputy prime minister, told reporters while on a visit to Los Angeles.

Earlier on Friday, Haniyeh said in Gaza that he may not head a unity government Hamas was trying to forge with the rival Fatah faction as a way to lift a Western embargo. While Livni was optimistic of a breakthrough, she also urged the international community to remain tough with Hamas.

The United States and Europe imposed crippling sanctions on the Palestinian Authority when Hamas took power in March because of the group's refusal to recognize Israel and renounce violence. Israel also withheld tax and customs receipts.

She said Israeli Prime Minister Ehud Olmert wanted to meet with Palestinian Authority President Mahmoud Abbas of Fatah to move the process along.

"The idea is to strengthen Abu Mazen (Abbas) in order to give him the possibility to send a message to the moderate Palestinians that there is another way, not only the Hamas way but also his way," She said.

On Thursday, Olmert said Abbas would be surprised by what Israel could offer him, but did not elaborate.

Olmert travels to the United States this weekend to meet with President George W. Bush in Washington and a gathering of Jewish leaders in Los Angeles.