Palestinian Authority Chairman Mahmoud Abbas is expected to deliver an important speech on Friday in which he will adopt aggressive language and issue a warning to Hamas that will stop short of threatening the use of violence, sources close to him say.

Abbas is expected to raise the possibility that he will recommend new elections or a referendum on the current state of affairs in the Palestinian Authority and its Hamas-led government, which some Palestinian observers have described as one of the bleakest in the modern political history of the Palestinian people.

The incidents in Rafah on Thursday were further proof that Hamas and Fatah are in the midst of a violent confrontation that is one step away from spiraling into civil war. The incidents at the Rafah crossing and its subsequent closing by Israel in order to prevent Prime Minister Ismail Haniyeh from transferring suitcases full of cash into the Gaza Strip, led to angry responses by the Palestinians. When news of the closure was broadcast this afternoon, a vendor at the New Gate in the Old City in Jerusalem cried out: "Do the Israelis want to starve us? Haniyeh is bringing in money for people who want to eat. Where else in the world is there such cruelty?"

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The anger against Israel is undermining the political power of Abbas who is calling for negotiations with Israel and peaceful coexistence. Aides to Abbas from the Fatah leadership have already concluded that there is no way of avoiding a direct and violent confrontation with Hamas. But Abbas would first like to organize his military and political power. To that end, he is trying to quickly raise large sums of funds that will serve as a counterweight to the money Hamas received from Iran and other Muslim contributors.

Palestinian sources say that Saudi Arabia has promised Abbas funds that will allow him to pay salaries and build his military force. In view of the crisis there are also rumors that the jailed Fatah leader, Marwan Barghouti, will be released as an Israeli gesture to bolster Abbas' standing, and prevent Hamas from reaping the political benefit of his release as part of a deal for Gilad Shalit.

Abbas will not order the dissolution of the current Palestinian government before he and his supporters are confident in their power to deal with Hamas, in the street and at the polls, and this will not occur for some months, sources close to the Palestinian leader say.