American officials informed envoys of Palestinian Authority Chairman Mahmoud Abbas that the U.S. will not lift the economic siege on the PA and will not work with the planned unity government so long as it fails to meet the three conditions set for the Hamas regime by the international community: recognizing Israel, recognizing agreements previously signed by the PA and the Palestine Liberation Organization (PLO) and renouncing violence.

Palestinian Prime Minister Ismail Haniyeh has already declared that his government would not recognize Israel. His political adviser, Ahmed Youssef, told Haaretz last Tuesday that the unity government would honor all signed agreements, but "only those that serve the Palestinian interest."

As for rejecting terrorism, Youssef said that "resistance" is considered a legitimate right so long as the occupation continues.

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Meanwhile, Palestinian sources said Saturday that Abbas and Foreign Minister Tzipi Livni will meet in New York next week on the sidelines of the UN General Assembly.

Israeli Foreign Ministry spokesman Mark Regev had no comment on the report, which would be a precursor to expected talks between Abbas and Prime Minister Ehud Olmert.

Palestinian negotiator Saeb Erekat said delegations led by Abbas and Livni would meet next week, but he wouldn't say when or what would be on the agenda.

The PA unity government's political platform was supposed to include the Saudi peace initiative, which ostensibly implies that if Israel withdraws to the 1967 lines, the Arab states would recognize Israel. However, U.S officials have made it clear that this would not be enough, and that they will insist on explicit recognition of Israel.

The message was conveyed by senior State Department officials who met last week in Washington with Abbas' adviser, Akram Haniyeh, and Abbas' chief of staff, Rafik al-Husseini.

The U.S. consul general in Jerusalem, Jack Wallace, conveyed a similar message to Abbas in a meeting Saturday.

The Palestinian envoys have been in the U.S. capital since last Monday to prepare tomorrow's meeting between Abbas and Secretary of State Condoleezza Rice. They are also preparing Abbas' meeting with President George W. Bush, which is scheduled to take place on Wednesday in New York, toward the end of the UN General Assembly. The two men last met in October 2005 at the White House.

Erekat said Abbas would discuss a wide range of issues with Bush, including the emerging coalition and the fate of kidnapped Israeli soldier Gilad Shalit, who was seized by Hamas-allied militants in June.

Abbas' spokesman, Nabil Abu Rudeineh, announced Saturday night that all preparations for a unity government will be suspended until Abbas returns from the U.S. He did not give a reason, but Palestinian sources say that in view of the American objections to the unity government, Abbas put off his original plan to announce at the weekend the firing of the Hamas cabinet and appointment of Ismail Haniyeh as head of the unity government.

The Palestinian newspaper Al Ayyam reported Saturday that Abbas will try to persuade Bush to accept the unity government's political guidelines.

Meanwhile, PA officials are holding consultations with countries in the Arab League ahead of the UN Security Council session on Wednesday, at which the Arabs will seek to pass a resolution on resuming the peace process under the Saudi initiative. According to Palestinian sources, the U.S. and Israel are willing for the Security Council to issue a statement supporting a resumption of peace talks, but will not accept a binding resolution to this effect.

EU agrees to back PA government
EU foreign ministers agreed earlier Friday to back the national unity government, despite U.S. misgivings.

"We agreed that we have to support the new Palestinian government. It's a very important turning point for the situation," Italian Foreign Minister Massimo D'Alema told Reuters during a meeting of 25 EU foreign ministers in Brussels.

"[EU foreign policy chief] Javier Solana told us in the platform there will be recognition by the new government of the treaty signed by the Palestinian Authority in the past - it means recognize Israel as a partner," D'Alema said.

The national unity government will replace the previous Hamas-led one, whose strident anti-Israel views have caused international aid to dry up, triggering financial chaos.

"We have a new Palestinian government. We have a new situation, and we should use it to get back to the peace process," Finnish Foreign Minister Erkki Tuomioja, chairing the meeting, told reporters on arrival.

D'Alema did not say whether the EU would resume contacts and financial assistance once the new government was in place.

Slovenian Foreign Minister Dimitrij Rupel told reporters: "We are happy about the government of national unity. We are now trying to help it, also financially."

But Britain's Europe Minister Geoff Hoon said: "We haven't reached that position yet. There is still some further clarification [needed] as to precisely what is the underlying agreement involving Hamas."

Washington said on Thursday it saw no Palestinian policy change to justify lifting the embargo on contacts and aid.

The Palestinians hope that bringing moderates from Abbas' Fatah party into a unity government with Hamas could prompt the EU and other world powers to restore direct aid that was frozen after the militant group won January's parliamentary election.

The joint government, which is expected to take several weeks to form, is to be based on a document that calls for a Palestinian state alongside Israel - effectively recognizing Israel.

But while Hamas has said it will support Abbas' efforts to seek peace, it is refusing to give up its calls for Israel's destruction.

Dutch Foreign Minister Ben Bot said earlier Friday that the EU would stick to demands formulated with the United States, Russia and the United Nations that the new Palestinian unity government must recognize Israel, renounce violence and accept previous peace accords.

"We are willing to engage with the Palestinian authorities if they are willing to comply with the three demands," Bot told reporters as he arrived for the meeting in Brussels. He said signals from the Palestinians so far were "not very positive."

After meeting Abbas in the West Bank city of Ramallah late Thursday, French Foreign Minister Philippe Douste-Blazy indicated formation of such a government could lead to resumption of assistance. He welcomed the document implicitly recognizing Israel and said if the new government accepts international demands, "the international community should re-evaluate and revisit its position toward political contacts and aid."

EU diplomats also said ahead of the Friday meeting that the bloc wants to see the agreement between Hamas and Fatah before deciding on further contact.

"We really do need to see what has been agreed" between Hamas and Abbas before the EU can restore normal, direct aid programs, said one diplomat who asked not to be named.

Abbas: We must deal with Shalit release
Abbas said Thursday that the release of Israel Defense Forces soldier Gilad Shalit, who was kidnapped by Palestinian militants in June, was one of the issues that must be dealt with before the formation of a unity government.

The Palestinian leader spoke to reporters on Thursday at a news conference with French Foreign Minister Philippe Douste-Blazy in the West Bank city of Ramallah.

Abbas said that Palestinian parliament members captured by Israel must also be released.

"We believe there are issues that should be resolved by then -- the Israeli soldier, the release of ministers and lawmakers and achieving calm in the Palestinian territories," Abbas said.

He added that the agreement reached with Haniyeh "included respecting all agreements" signed by Israel and the Palestine Liberation Organization, headed by Abbas.