Palestinian Prime Minister Ismail Haniyeh said Sunday that the deteriorating financial situation and the violent political infighting that has claimed the lives of 11 Gazans will not lead to Palestinian civil war.

Addressing 300 religious and political leaders in Gaza at a "unity and reconciliation" feast on Sunday, Haniyeh appealed for calm.

"We may criticize each other, raise our voices," he said. "However, it is certainly our concern and religious and moral commitment that matters don't come down to conflict, infighting and civil war."

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Haniyeh also again said his Hamas-led government will not recognize Israel and said a widely touted Arab peace plan is problematic because it does.

Addressing an "Iftar" feast at the end of a day of Ramadan fasting, Haniyeh said Hamas and the government are "indistinguishable," and "we will not recognize or normalize" relations with Israel. He said the main problem with the Arab peace plan, presented in 2002 by Saudi Arabia and endorsed by an Arab summit, is that it recognizes Israel in exchange for an Israeli pullout from the West Bank, Gaza Strip, east Jerusalem and Golan Heights.

Haniyeh hinted that peacemaking with Israel could be left up to Palestinian Authority Chairman Mahmoud Abbas, who also heads Fatah. Haniyeh said the Arab plan "leaves a lot of room for political maneuvering" for Abbas.

Haniyeh said he still hopes for a unity government with Fatah, but Abbas said last week that negotiations have broken down.

Abbas aide: New vote if no coalition is formed
Abbas plans to present the Hamas-led Cabinet with an ultimatum in the coming days to accept an agreement for a coalition government or head to early elections, an Abbas aide said Sunday.

In a meeting with U.S. Secretary of State Condoleezza Rice last week, Abbas said he would travel to the Gaza Strip in the coming days for last-ditch talks on forming a joint government with Hamas, an Abbas aide said. If Hamas does not agree by the end of the Muslim holy month of Ramadan - in two weeks - then he will dissolve the Cabinet, according to the aide, who spoke on condition of anonymity because of the sensitivity of the discussions.

Abbas will then present a new government headed by an independent to the Hamas-dominated parliament, which will likely vote it down, the aide said. He will propose a second independent government and when that is voted down, he believes he will have proven that the deadlock is great enough to justify new elections, the aide said.

The plan faces several obstacles, including disagreement over whether Abbas has the legal right to call new elections and questions about whether his Fatah Party would perform better than in the previous election.

Ahmed Youssef, political adviser to Haniyeh, said the two sides would find a way to reach agreement on a new government before it went that far.

"We have to see (Abbas) to hear what is the limit and what is not allowed. And we will agree, and God willing we will find a way out of this tunnel and end this before the end of Ramadan," he said.