Nabil Shaath August 16, 2003 AP
Nabil Shaath Photo by AP
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A top Palestinian official said on Tuesday that a new unity government between recently reconciled Hamas and Fatah will be formed in 10 days.

In an interview with Ma'an news agency, Fatah leader Nabil Shaath said that although the prime minister of a future interim unity government has yet to be announced, current PA Prime Minister Salam Fayyad is still in the running for the position.

Fayyad has taken unprecedented steps in recent months toward Palestinian statehood, recently presenting proposal in Brussels delineating a three-year aid plan that would allow for the establishment of a Palestinian state in the foreseeable future.

Palestinian leaders plan to ask the United Nations General Assembly in September to recognize a Palestinian state in all the lands Israel occupied in 1967. Fayyad has made it clear that in the event that Israel and the Palestinians do not reach a negotiated settlement, a Palestinian state will be declared unilaterally.

Hamas and Fatah leaders signed a unity agreement last week in Cairo after a four-year-long rivalry following a civil war in 2007. The more moderate Fatah has been administering the West Bank, while militant Hamas has been ruling the Gaza Strip.

The two groups decided to reconcile in a bid to bring about the establishment of a Palestinian state, to be created in the West Bank and Gaza. Israel has opposed the unification, saying it will not negotiate with Hamas, who refuses to recognize Israel's legitimacy, and whose charter calls for Israel's destruction.

The Palestinian factions have agreed to create an interim unity government and prepare for national elections.

Shaath told Ma'an that the U.S. and EU are pressuring Israel to release the NIS 300 million in tax funds it has withheld following the signing of the deal, saying "we don't have financial reserves and the PA is in debt. It doesn't have the ability to remain stable for a month or two without reserves."

Israel has explained the withholding of funds, saying it refuses to let revenues flow to Hamas.

The international community has implored Israel to release the tax money to the Palestinians, with the EU announcing last week that it would send 85 million euros to the PA to cover the salaries of workers and help families who would suffer from the freeze.

UN Secretary General Ban Ki-moon urged Israel on Friday not to halt the transfer of the money to the PA, calling on Israel to "make decisive moves towards a historic agreement with the Palestinians".