GAZA CITY, 19 January 2007 — Palestinian President Mahmoud Abbas and Hamas’ supreme leader Khaled Meshaal will meet tomorrow for the first time in years to try to clinch an elusive agreement on forming a national unity government, aides to both men said yesterday.

Abbas hopes a coalition between Hamas and his Fatah movement would persuade the West to lift painful sanctions it imposed on the current Hamas-led government for refusing to disarm and recognize Israel’s right to exist.

But it’s unclear whether Hamas and Fatah can end their yearlong political deadlock and reach a power-sharing agreement. An Abbas aide said disputes still remain on the toughest issues — control of the powerful security forces and Hamas’ refusal to recognize Israel’s right to exist.

Months of coalition talks failed to produce an agreement, and the rivalry between the two factions spiraled into deadly internecine fighting that recently claimed 35 lives.

But last week, officials from both sides abruptly reported that significant progress was made in secret talks between Hamas’ Syria-based political chief Meshaal and Abbas envoys.

Negotiator Ziad Abu Amr, an independent lawmaker with ties to both factions, said the two men would try to put the finishing touches to a deal at a meeting in the Syrian capital tomorrow.

“There are issues we have agreed upon and issues that still need agreement, but we are continuing our efforts and did not reach a deadlock,” Abu Amr said.

Nimer Hamad, an Abbas political adviser, confirmed the planned meeting, but said two key obstacles to a coalition government remain — Hamas’ reluctance to accept a political platform that implicitly recognizes Israel and control of the Interior Ministry, which oversees the Palestinians’ 85,000 security forces.

Meanwhile, Israel plans to turn over $100 million in frozen tax funds to Abbas by today, an Israeli official said.

The money is part of Israel’s strategy to boost the moderate Palestinian leader in his standoff with Hamas, the official said.

In another development, Israel’s deputy defense minister said yesterday that Israel and the Palestinians can wrap up a final peace deal within two years, but the international climate for such talks might not remain favorable for long.

The deputy minister, Ephraim Sneh, has formulated a new peace plan together with Defense Minister Amir Peretz of the moderate Labor Party. He is one of several leading Israeli officials, including Foreign Minister Tzipi Livni, to recently articulate new ideas for re-energizing peace efforts.

— With input from agencies