Gaza City, Gazy Strip The Islamic group Hamas made a deal Monday to share power with the more moderate Fatah headed by Palestinian President Mahmoud Abbas after six months of crushing sanctions imposed to force the militants to recognize Israel and end violence.
Without the foreign aid, the Hamas-led Palestinian government has been unable to pay salaries to its tens of thousands of civil servants, causing widespread hardship. In a sign of desperation, women parted with their dowry of gold jewelry - their only financial security in the event of divorce.
The government had pleaded with Muslim countries for funds, launched fundraising drives in mosques and even resorted to smuggling in cash in suitcases to help keep itself afloat.
But on Monday, Abbas and Prime Minister Ismail Haniyeh of Hamas announced an accord that could restore international aid and lead to contacts with Israel.
"The continuous efforts to form a national unity government have ended successfully with the announcement of a political program for this government," Abbas told Palestinian television. "Efforts in the next few days will continue to complete the formation of the national unity government."
The breakthrough compromise falls short of international demands that Hamas fully renounce violence, but Israeli officials still voiced cautious support for the accord.
Both Fatah and Hamas officials said their deal was based on a proposal - formulated last spring by prominent prisoners held by Israel - that many have interpreted to imply recognition of Israel. That proposal calls for a Palestinian state alongside Israel - effectively abandoning the Hamas goal of destroying the Jewish state - and accepts U.N. resolutions that call for compromise with Israel. Hamas also would allow Abbas to handle all dealings with Israel.
In addition, it endorses a wider Arab plan seeking a comprehensive peace agreement with Israel. Arab allies of the U.S. are expected to present the plan to the U.N. Security Council this month.
Hamas, which is committed to Israel's destruction, swept to victory in January legislative elections, defeating Fatah, and formed a government by itself. The West and Israel reacted by cutting off hundreds of millions of dollars in aid, accusing Hamas of being a terrorist group.
Initially, Palestinians held the West and Israel to blame for their misfortune, but in recent weeks, they have directed that criticism at the government. Tens of thousands of civil servants launched a strike this month to protest the government's failure to pay them. A two-month Israeli offensive in the Gaza Strip - begun after Hamas-linked militants infiltrated Israel and captured a soldier - has added to the Palestinians' misery.
Abbas aide Nabil Abu Rdeneh said the president would dissolve the Hamas-led government within 48 hours to clear the way for the formation of a coalition.
Haniyeh, who said earlier that he would retain his post in the new government, confirmed the two parties planned to rule together.
"I bring good news to the Palestinian people, and I feel proud and content that at this important moment we establish a national coalition government," Haniyeh said.