New Palestinian government opens door to aid

Palestinian President Mahmoud Abbas swore in an emergency government yesterday in a move that could bolster him in his power struggle with Islamist Hamas rivals by ending a US-led aid embargo.

The 13-member Cabinet, including an ex-guerilla chief as Interior Minister, replaces a short-lived unity government Mr Abbas dismissed after Hamas seized control of the Gaza Strip in a surge of factional fighting last week.

"Security of the citizen is the priority on the basis of the sovereignty of the law," Salam Fayyad, the Western-trained economist who becomes Prime Minister, told Palestinians in a televised address.

Aides of Mr Abbas said he had issued decrees bypassing constitutional limits on his powers to establish the emergency government and keep it in place without the approval of the Palestinian Parliament, which has a Hamas majority.

Mr Abbas also issued bans on Hamas's armed institutions, while Mr Fayyad froze government accounts to prevent Hamas's dismissed ministers from gaining access to funds - though Washington had already taken similar steps on international accounts.

Hamas, which convincingly defeated Mr Abbas's long-dominant and more secular Fatah to win Palestinian elections last year, denounced the new Cabinet as a "coup" mechanism.

Flexing his executive muscle, Mr Abbas named retired guerilla chief and Fatah ally Abdel-Razak Yahya as Interior Minister - a post overseeing all Palestinian security forces.

"Today is a new era, a turning point for ending the siege and rebuilding the Palestinian Authority," Mr Abbas's spokesman Nabil Abu Rdainah said.

The US consul-general who handles relations with the Palestinians said Washington would lift a ban on direct financial aid to the new emergency government, clearing the way for the European Union and Israel to follow suit.

Western powers imposed an aid embargo after Hamas came to power in March 2006 because it failed to recognise Israel, renounce violence and accept interim peace deals. Hamas secured alternative support from Israel's arch-foe Iran.

Mr Fayyad serves as Palestinian Prime Minister, replacing Ismail Haniyeh of Hamas. He also holds the finance and foreign affairs portfolios.

Hamas said it would not recognise the emergency Cabinet. "Fayyad's government is not a national government and is not legitimate. It will not win legitimacy or recognition, except from the occupation (Israel) and the Americans," Sami Abu Zuhri, a Hamas official, told Reuters.

Hamas has made some conciliatory overtures, however. It still refers to Mr Abbas as President, and says it does not want a Hamas mini-state in Gaza, where 1.5 million people are crowded along 40 kilometres of coast between Israel and Egypt.

Israeli Prime Minister Ehud Olmert, en route to the United States for talks with President George W. Bush, welcomed Mr Abbas's forming of a new government under Mr Fayyad as a breakthrough for peace efforts.

"(The current situation) presents an opportunity that has not existed for a long time," Mr Olmert said on Saturday.

Separately, two Katyusha rockets hit the northern Israeli town of Kiryat Shmona near the border with Lebanon. It was the first apparent cross-border attack since last year's war between Israel and Hizbollah guerillas in Lebanon.

Hizbollah denied any links to the firing, and a security source in Lebanon said it was Palestinian fighters.

Gaza and the much larger West Bank are only about 45 kilometres apart, with Israel in between, but they now appear poised to function as two separate territories.

Putting new pressure on Hamas, a top Israeli energy company, Dor Alon, said it was suspending fuel supplies for private use in Gaza, though the tap remained open for power stations.