GAZA CITY, 14 November 2006 — Rival Palestinian factions were yesterday haggling over portfolios in a future unity government as Israeli Prime Minister Ehud Olmert said he was ready, under conditions, to deal with the new Cabinet.

Talks were taking place one day after the main parties said they had agreed on a US-educated academic to head the Cabinet that Palestinians hope will end a crippling international boycott on the current Hamas-led administration.

Delegates from President Mahmoud Abbas’ Fatah party and Islamist movement Hamas huddled together at the Palestinian Authority headquarters in Gaza City in the presence of current Prime Minister Ismail Haniyeh, an official said.

Hamas spokesman Fawzi Barhoum said the meeting would focus on “quotas, dividing up portfolios and the date when the new government will be announced.” While Hamas wants portfolios shared out on the basis of the balance of power in Parliament, dominated by its own members who thrashed Fatah at a general election last January, Barhoum also indicated the party was willing to bend.

“Hamas is ready to show flexibility in order to serve the national interest,” he hold AFP.

Calling the talks “serious and positive” Fatah spokesman Abdelhakim Awad also claimed his party was ready to make concessions for the talks to conclude. “Failure is not on the agenda,” he said.

Sources close to the talks said negotiations were focused on dividing up the four most important Cabinet posts — finance, foreign affairs, interior and information.

“The two parties will hold these important posts but need to find an agreement on sharing them out,” the source said.

Palestinians desperately hope that a unity government will be able to end a Western economic and political boycott that has left the territories grappling with unparalleled fiscal crisis ever since Hamas took office last March.

The European Union, Russia, the United Nations and the United States has pinned a resumption of aid payments on the new government recognizing Israel and past agreements, and formally renouncing violence.

In a rare interview with a Palestinian newspaper published yesterday, Israel Prime Minister Olmert said he was prepared to talk to a unity Cabinet, including Hamas, but provided the Islamists bow to international demands.

“If Hamas accepts the quartet conditions, I will sit down with them,” Olmert was quoted as telling Al-Quds daily. Contextualizing a potential shift in approach, Olmert recalled that Israel had boycotted PLO leaders, such as current President Mahmoud Abbas, before later negotiating with them after the Palestinian body recognized Israel in 1993.

“Even Abu Mazen (Abbas) belongs to an organization that we considered as terrorist in the past but he adopted new principles to which he remains faithful.” Fatah and Hamas sources said Sunday that they agreed on Mohammed Shabir, a clinical biologist and former president of the Islamic University who is considered close to Hamas but never joined the party, as the next premier.

Shabir told Reuters he had not been officially approached and that no final decisions have been made. “When the president asks me, then I will have my say,” Shabir said.

Abbas was due to brief King Abdallah in Jordan today on the unity government efforts before heading to Cairo for similar talks with President Hosni Mubarak, said the Palestinian ambassador to Egypt, Atallah Khairy. Within Fatah, Abbas was on Sunday officially appointed “president of the central committee” and the movement’s “commander in chief” during a vote of the 132 members of the party’s Revolutionary Council meeting in the West Bank.

His election relegated the exiled Farouk Qaddoumi, who presented himself as Fatah leader after Yasser Arafat died two years ago, into second place.

Palestinians hope a new prime minister and a unity Cabinet will ease Western sanctions imposed after Hamas came to power in March. “We can say that Fatah did not give any objections. Mohammad Shabir is a candidate by Hamas, and Fatah has no objection. Therefore, he has a big chance,” said Rudwan Al-Akhras, a spokesman for Fatah’s parliamentary bloc.

Even though Hamas has proposed Shabir it was not willing to say he was the definitive candidate. “It is not yet suitable to announce the name of the prime minister,” Barhoum told Reuters.

“The announcement is pending on some issues under discussion, among these issues the name of the next prime minister,” he said. “When all these issues are finalized, and we hope that would happen very soon, we will be able to declare the government, the prime minister and the agenda to the people.”

“We are facing a new era in which we will all work side by side and shoulder to shoulder in order to be able to protect the legitimate rights of the Palestinian people,” said Ahmed Qorie, a senior Fatah official who is also a former prime minister. “The coming days will witness the true breakthrough, and the responsibilities upon the leaders will become greater.”