Palestinian Prime Minister Salam Fayyad will resign in the coming weeks to enable the formation of a Fatah-Hamas unity government. He will apparently be replaced by a Palestinian businessman who is politically unaffiliated and would be acceptable to the West as well as to Hamas and Fatah.

The new premier will head a government of technocrats whose writ will cover both the West Bank and the Gaza Strip.

On Tuesday, senior Palestinian sources told Haaretz that over the past few days, a breakthrough occurred in the Egyptian-brokered talks to set up a unity government. Next Friday, Palestinian Authority President and Fatah leader Mahmoud Abbas will meet in Cairo with the head of Hamas' political bureau, Khaled Meshal, in an effort to finalize the deal.

The breakthrough was spurred by the report of a UN Security Council subcommittee on the PA's bid for recognition as a state. The report said the PA doesn't fulfil the conditions for statehood because it doesn't control the Gaza Strip. Formation of a unity government is thus expected to help the PA secure a Security Council majority in favor of statehood.

Fayyad himself told the East Jerusalem daily Al-Quds that the split between the West Bank and Gaza is a barrier to statehood and Fatah-Hamas unity is necessary to solve this problem.

"I will never be a barrier to reconciliation, and I reject the use of me as a pretext for continuing the split," he told the paper in an interview published on Tuesday. He therefore urged all the Palestinian factions to unite behind a new prime minister.

Though Hamas and Fatah had agreed to set up a unity government about half a year ago, Abbas' refusal to replace Fayyad had been a major barrier to implementing this agreement, as Hamas deemed Fayyad unacceptable.

Azzam al-Ahmed, a close associate of Abbas who serves as his liaison to Hamas, told Palestinian journalists this week that Fatah is the one that decided to replace Fayyad. While some in Fatah had initially opposed the unity deal, even Yasser Abed Rabbo - another close associate of Abbas who had long been a sworn opponent of the deal - has changed his mind lately.

In a recent interview with Al-Quds, Abed Rabbo called for setting up a unity government without delay and indirectly criticized Abbas' long-standing objection to replacing Fayyad, saying, "We must abandon all preconditions that endanger the establishment of a unity government."

During a visit to Tunis last week, Abbas said that dismantling the PA - a move senior Palestinian officials have been threatening with increasing frequency lately - is not a proper solution to the current impasse in the PA's statehood bid. Salah Bardawil, a senior Hamas official in Gaza, said a few days ago that Hamas also opposes dismantling the PA, but does seek to change its character.

"The near future is liable to be the last diplomatic window of opportunity," a close associate of Abbas warned Haaretz. "It is liable to close in May, with Hamas' victory" in the planned Palestinian elections.

The unity deal calls for holding new elections for both the PA presidency and the Palestinian Legislative Council in May 2012. Abbas has already announced that he won't run for reelection, but said he would remain committed to both the diplomatic process and the security calm after the unity government is established.

The planned PA elections will take place a few months after Egypt's parliamentary election, which has been called for later this month. The Muslim Brotherhood, of which Hamas is an offshoot, is expected to do well in Egypt's election, and by so doing, it will grant Hamas an implicit imprimatur for taking part in a PA government that both recognizes and maintains peaceful relations with Israel.

Egyptian Foreign Minister Mohamed Amr reiterated recently that Egypt will continue to uphold its peace treaty with Israel.

When the Hamas-Fatah deal was first signed, Prime Minister Benjamin Netanyahu denounced it as a "death blow to peace and a huge prize to terror." Formation of a Hamas-Fatah unity government is thus likely to bring about a rupture in ties between Israel and the PA and a complete freeze in transfers of the tax money Israel collects on the PA's behalf.

The unity government and the attendant departure of Fayyad, who enjoys the West's support and trust, is also likely to cause a dispute among members of the Quartet - the United States, United Nations, European Union and Russia - over how to respond.