Palestinian officials from the rival Fatah and
say they have reached an initial agreement on ending a four-year-old rift that has left them divided between rival governments in the West Bank and the Gaza Strip.
The officials say the plan calls for the formation of a single caretaker government in the coming days, and preparations to hold presidential and legislative elections a year from now.
"The two sides signed initial letters on an agreement. All points of differences have been overcome," Taher Al-Nono, the Hamas government spokesman in Gaza, told Reuters. He added that Cairo would shortly invite both sides to a signing ceremony.
Prime Minister Benjamin Netanyahu issued a recorded video message in response to the announcement on Wednesday saying that the "Palestinian Authority needs to choose between peace with the people of Israel and peace with Hamas. You cannot have peace with both, because Hamas aspires to destroy the State of Israel, and it says so openly."
According to Netanyahu, "Hamas fires rockets at our cities and anti-tank missiles at our children. I think the mere idea of reconciliation demonstrates the Palestinian Authority's weakness, and brings up the question of whether Hamas will take over Judea and Samaria as it did Gaza."
Netanyahu added: "I hope the PA makes the right choice – to choose peace with Israel. The choice is hers."
State officials told Ynet that the new agreement sends a message that in the absence of a peace process and amid Mideast unrest, the PA can also walk the road of radicalization.
"The details of the agreement must be examined. The PA is sending a message which can be problematic for Israel and is aimed at stressing that without a peace process, the Palestinians have other options that are not necessarily in Israel's interest," one state official said.
A US official said in response that any Palestinian government must renounce violence, respect past peace deals and recognize Israel's right to exist if it is to play a constructive role.
The accord was first reported by Egypt's intelligence service, which brokered the talks.
"The consultations resulted in full understandings over all points of discussions, including setting up an interim agreement with specific tasks and to set a date for election," Egyptian intelligence said in a statement.
In a statement carried by the Egyptian state news agency MENA, the intelligence service said the deal was hatched by a Hamas delegation led by Moussa Abu Marzouk, deputy head of the group's politburo, and Fatah Central Committee member Azzam al-Ahmad.
Al-Ahmad and Abu Marzouk said the agreement covered all points of contention, including forming a transitional government, security arrangements and the restructuring of the Palestine Liberation Organization to allow Hamas to join it.
A senior Egyptian intelligence official told Reuters that he expected Abbas and Hamas leader Khaled Mashaal, who is based in Damascus, to attend the signing of the agreement in Cairo.
Despite the agreement, key questions remain about who will control the rival security forces.
Disagreements over security control erupted into the June 2007 civil war that ended with Hamas seizing control of Gaza.
Earlier on Wednesday, Prime Minister Benjamin Netanyahu said
that the Palestinian plan to declare an independent state hurts their commitment to peace talks with Israel and an accord. "The accord can only be achieved through negotiations," he told US senators.
AP, Reuters, Elior Levy and Attila Somfalvi contributed to this report