The Palestinian unity government which will be formed under an agreement reached in Saudi Arabia will not recognize Israel, a political advisor to Palestinian Prime Minister Ismail Haniyeh of Hamas said Saturday.

"The issue of recognition was not addressed at all [in Mecca]," Ahmed Youssef said. "In the platform of the new government there will be no sign of recognition [of Israel], regardless of the pressures the United States and the Quartet would exert," he said.

Youssef said Haniyeh hoped to form the new government before a meeting of the Quartet of Middle East mediators on February 21 and urged the Quartet to lift sanctions on the Palestinians.

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"The pretext by the Quartet to continue the boycott of Hamas members in the government should end because they are wrong policies that will only push towards more tension and possibly towards more conflict in the Palestinian territories," he said.

The Quartet on Friday repeated its demand that any future Palestinian government must renounce violence, recognize Israel and respect peace deals in order to receive Western aid.

In a joint statement, the European Union, Russia, the United Nations and the United States withheld judgment on whether a new national unity government to be formed by rival Palestinian factions Hamas and Fatah met its conditions.

"The Quartet welcomed the role of the Kingdom of Saudi Arabia in reaching the agreement to form a Palestinian National Unity government. The Quartet expressed hope that the desired calm would prevail," the group said in the statement released by the U.S. State Department after a quartet conference call.

"While awaiting formation of the new Palestinian government, the Quartet reaffirmed its statement of February 2 regarding its support for a Palestinian government committed to nonviolence, recognition of Israel, and acceptance of previous agreements and obligations," it added.

However, Russia on Friday welcomed the unity government agreement and appealed to Western nations to lift the freeze on direct aid to the Palestinian government.

Iran welcomed the agreement between Fatah and Hamas, state news agency IRNA reported Saturday.

Iranian Foreign Ministry spokesman Mohammad-Ali Hosseini termed Thursday's deal a "constructive move" for consolidation of unity among Palestinians.

He said that Iran would welcome any move in line with Palestinian interests and aimed at foiling United States and Israeli "conspiracies" in the region.

Unity deal
Hamas and its rival movement Fatah signed a deal earlier this week to end factional violence and form a coalition.

"We think the future Palestinian national government ... will be an important factor in the process of reviving Israeli-Palestinian talks," the Foreign Ministry said in a statement.

"We also believe the implementation of Mecca agreements should be combined with lifting a blockade of the Palestinian territories which has inflicted suffering and hardship on the people."

Meanwhile, Israeli officials said the coalition deal failed to meet Western conditions to end the sanctions and initial reaction from the United States and Europe was muted.

"The conditions have not been met. This is not something we can live with," said one Israeli official, on condition of anonymity.

Another senior official said: "Although we do not know yet what the agreed Palestinian government policy guidelines will be, in the paper that Palestinian President Mahmoud Abbas presented... it is obvious that it does not meet the conditions laid out by the Quartet (of Middle East mediators)."

A formal Israeli response is expected after Prime Minister Ehud Olmert's regular cabinet meeting on Sunday.

U.S. Secretary of State Condoleezza Rice, who participated in Friday's quartet conference call, is likely to have further consultations before she leaves for the Middle East toward the end of next week, the State Department said.

During her trip, Rice plans to hold a three-way meeting with Prime Minister Ehud Olmert and Abbas, whom Washington is supporting in his power struggle with Hamas.

A U.S. official, who spoke on condition of anonymity, said, "The real question for this unity government ... is what policies is it going to adopt? How is it going to act? How does that agreement in principle on that piece of paper that they produced in Mecca get translated into an actual government with actual policies and does that actual government and actual policy meet the quartet standards?"

Fresh from Mecca, Saeb Erekat, an Abbas advisor and chief Palestinian negotiator, briefed Rice and then came to New York to talk to UN Secretary-General Ban Ki-moon.

According to Palestinian UN observer, Riad Mansour, Erekat took note of Rice's cautious reaction and said the agreement should be judged on actions and results.

"You want to study thoroughly the Mecca agreement and read between the lines, especially with regard to honoring and respecting old agreements," Mansour quoted Erekat as saying.

"One should consider that shifting political positions does not happen overnight and one should be patient and give time to allow these transformations to take place," Mansour said.

The deal between rival Palestinian factions Fatah and Hamas, which was reached after two days of intensive negotiations in the Saudi city of Mecca, sets out the principles of the unity government, including an ambiguous promise that it will "respect" previous peace deals with Israel, delegates said. The Mecca accord does not address the other two international requirements.

Click here for the full text of the agreement

"The international community has made it clear that in order to be able to have a broader relationship with the Palestinian Authority government, that those principles are going to have to be met," The New York Times quoted Casey as saying. He added that officials were still studying the accord.

Livni: PA government must respect Israel's right to exist
Foreign Minister Tzipi Livni called on the international community Thursday to ensure that Israel's right to exist is respected by any Palestinian government that emerges from the talks.

Speaking in Madrid, Livni said the three requirements were not negotiable and applied to any future Palestinian governments.

"We expect the international community to stick to its own requirements that were stated after the elections which Hamas won," she said.

An agreement to abide by the three international demands would mean the lifting of the painful financial boycott of the Palestinian government, imposed after Hamas' election victory in January 2006.

Meshal asks world to recognize new gov't
The Qatari satellite channel Al-Jazeera quoted Abbas as saying at the ceremony that he has asked Palestinian Authority President Haniyeh to form the new government, and to respect all past peace agreements. The latter request had been a key sticking point in negotiations between the two sides.

Al-Jazeera aired images from the signing ceremony, attended by Saudi Arabia's King Abdullah, Palestinian Authority Chairman Mahmoud Abbas of Fatah and Hamas political leader Khaled Meshal.

Meshal, also speaking at the ceremony, vowed that Hamas would not break the agreement, and that all factions would respect the deal. He asked the international community to recognize the new government.

Meshal pledged that the accord would put an end to violence after a series of truces between Fatah and Hamas gunmen that collapsed.

"I tell those who fear that the fate of this agreement will be the same fate of the old ones," he said. "We have pledged our allegiance to God from this sacred place... and we will go back to our country fully committed to it.

"I say to our young people that this is an agreement of the leadership of the biggest groups and none of you should accept any order from others to fire," he added.

In Gaza City, celebratory gunfire erupted for nearly an hour after the accord was announced. Residents expressed hope that the deal will mean a lifting of a crippling international financial boycott, imposed on the government Hamas formed after winning January 2006 elections.

"We've been holding our breath. God willing, this is a permanent agreement, not a temporary truce. We hope this will lead to lifting the siege," said Mahmoud Qassam, a fish seller watching the ceremony at his home in Gaza City's Shaati refugee camp, meters from Haniyeh's home.

Announcing the agreement at the ceremony, Abbas aide Nabil Amr read a letter in which Abbas designated Haniyeh to draw up the new government within five weeks, according to the formula agreed on in the talks.

The letter of designation also said the new Haniyeh-led government would respect past peace deals signed with Israel by the Fatah-dominated PLO.

Abbas said the deal would "satisfy our people... and bring us to the shores of peace... This initiative has been crowned with success."

Meshal said the accord will "unify our ranks. There is a commitment and unity. We will perseve this partnership."

It said it would also follow a document drawn up last summer by Hamas and Fatah activists jailed in Israel. That document calls for a Palestinian state in the West Bank, Gaza and East Jerusalem.

Fatah official Maher Mekdad said Thursday that the two sides had reached an agreement on the division of ministries in a new cabinet.

The important post of interior minister, who controls most security services, will be an independent candidate proposed by Hamas and approved by Abbas, Mekdad said.

The second day of the marathon summit was spent working on the second part of the agreement: to what degree a new government will recognize previous peace deals with Israel.