Fayyad may quit for sake of Palestinian unity

RAMALLAH, West Bank (Reuters) - Palestinian Prime Minister Salam Fayyad signaled on Monday he is ready to step aside to help reconcile the two rival factions of the Palestinian national movement and pave the way for presidential and parliamentary elections.

The departure of the U.S.-educated former World Bank economist, 59, would be a concession by President Mahmoud Abbas, leader of the mainly secular Fatah movement which is dominant in the Israeli-occupied West Bank, to his Islamist rivals Hamas, who control the Israeli-blockaded Gaza Strip.

Abbas will call in a speech on Wednesday for a government of independent experts to prepare for the elections, presidential adviser Nemir Hammad told Reuters.

This scenario was part of a reconciliation deal signed last April but never implemented. Elections were last held in 2006.

Abbas is also due to hold face-to-face talks in Cairo this month with his arch-rival, the exiled Hamas leader Khaled Meshaal. One official said the meeting could bring reconciliation closer "should Abbas abandon his commitment to Fayyad" as his candidate to head the caretaker government.

Fayyad, appointed by Abbas in 2007, is credited with revitalizing the economy and building institutions needed to set the Palestinian Authority on the path to full statehood. But Hamas, which accuses him of helping Israel to blockade the Gaza Strip, has never recognized him.

"I say again it is time to end division," Fayyad told the Al-Quds newspaper. "I call upon all factions and political parties to agree on a new prime minister. I was never an obstacle to the implementation of the reconciliation and I refuse to be used as a pretext for continuing the split."

PEACE TALKS DEADLOCKED

International mediators saw Palestinian negotiators in Jerusalem on Monday in a bid to restart stalled talks with Israel on a peace deal to end the 63-year-old conflict. Hamas has no role in the talks and is not seeking one.

Envoys of the so-called Middle East Quartet -- the United States, European Union, Russia and the United Nations -- were meeting separately with Israelis and Palestinians in an effort to relaunch direct negotiations that were suspended a year ago.

But there was no end to the deadlock over Israel's West Bank settlement building and Palestinian demands that it cease.

Chief Palestinian negotiator Saeb Erekat repeated that settlements and a two-state solution were mutually exclusive.

Israeli officials say reconciliation of the two Palestinian movements would wreck the peace process for good, since Hamas refuses even to recognize Israel, let alone sign a peace treaty.

Abbas says the process has yielded nothing for the Palestinian people over the past 20 years. He is pursuing an alternative course to statehood by seeking international recognition without waiting any longer for the elusive peace agreement.

But reconciliation is imperative. The longer Palestinians in the West Bank and Gaza lead separate lives under separate leaders, the greater the chance of permanent division creating two separate 'Palestines'.

The territories are separated by about 30 kms (20 miles) of Israeli territory and an ideological gulf that shows no real sign of narrowing since Hamas ejected Fatah from the Gaza enclave in a brief civil war in 2007.

For peace talk purposes, Abbas and his Palestinian Authority formally govern both parts of what would be the future Palestinian state. But that is far from the reality.

"Two entities have developed. An Islamist model in Gaza and a different one in the West Bank," says Gaza-based political analyst Talal Okal.

Reporting by Nidal al-Mughrabi in Gaza and Ali Sawafta in Ramallah; Writing by Douglas Hamilton; Editing by Richard Balmforth)

(Reporting by Nidal Almughrabi)