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Israel's liaison officers in the West Bank will stop dealing with the Palestinian Authority after the Hamas cabinet takes office and switch their focus to international organizations and ordinary Palestinians, anIsraeli official said Sunday.

Palestinian Prime Minister-designate Ismail Haniyeh said Saturday that the new government under Hamas will be sworn in Wednesday, following its ratification by parliament.

Shlomo Dror, an Israel Defense Forces spokesman on Palestinian affairs, said that the liaison offices throughout the West Bank would continue functioning after the cabinet takes office.

The office will no longer work with the Palestinian Ministry of Labor, but will deal with individual Palestinian workers, Dror said. It also will deal with medical emergencies through hospitals and aid groups, not the government, he said.

"The liaison office is going to continue to operate. We will work more with the Palestinian people and less with the Palestinian Authority we will try to work with international organizations and local hospitals," Dror said.

Israel will also reduce its relations with the Gaza Strip, from which it withdrew last year, to a minimum, he said.

The Palestinian Legislative Council is to convene on Monday for a confidence vote on the 24-member cabinet. Approval is seen as a certainty given that Hamas has a majority in parliament after a crushing election victory in January.

"On Wednesday at the latest there will be a special session for the government to be sworn in before Abu Mazen," Haniyeh told reporters, referring to Chairman Mahmoud Abbas.

Earlier Saturday, a senior aide to Abbas hinted that the PA chairman was prepared to bring down Hamas' incoming government if its militant policies harm Palestinian interests.

In a letter to Haniyeh, Abbas said that if the new government, which is to be sworn in Thursday, "adopts positions that would be detrimental to Palestinian interests, then the president will use his authority according to the Basic Law," the aide, Tayeb Abdel Rahim, told reporters.

Abdel Rahim did not elaborate, but the Basic Law, which is the Palestinians' de facto constitution, empowers the president to disband the government.

Abbas plans to warn the incoming government led by Hamas militants that it has no future unless it agrees to recognize Israel, U.K. newspaper, The Guardian, reported Saturday.

Hamas, whose cabinet is to be sworn in on Thursday, rejects Israel's right to exist, and despite Western threats of an aid cutoff, has refused to abandon its violent ideology.

The Guardian newspaper said the letter, which it saw, told Haniyeh that Hamas' policies would damage or reverse "diplomatic achievements," give Israel a pretext not to negotiate, and cost the Palestinian Authority much-needed foreign aid.

Sources close to Abbas said the letter was meant to "draw the battle lines" with Hamas, which has no experience in national politics, but also to warn Israel and the West that threats to sever aid and ties would likely strengthen the Islamist party, the newspaper said.

"Abu Mazen doesn't want Hamas to fail, he wants it to transform, to accept the basic tenets of the political system," the source said.

But a Western aid cutoff could play into Hamas' hands, the source cautioned.

"Under no circumstances will Abu Mazen allow it to be seen that a Hamas government is failing as a result of a foreign conspiracy. This works for Hamas," he said. "To avoid the perception they fail because of a foreign conspiracy we need the world to show that it is still willing to support the moderate line and not just cut us off."

Abbas to retain control of investment fundA Palestinian investment fund that controls hundreds of millions of dollars will remain under the control of Abbas, Palestinian legislator Saeb Erekat said Friday - a move that would deny Hamas militants access to the money after they take power next week.

In another measure to consolidate his power before the Hamas government is installed, Abbas plans to set up a new presidential agency to oversee border crossings between the Palestinians and Israel, according to Erekat, who said he's been designated the agency's chief. The agency's purpose would be to settle border disputes with Israel that might keep the crossings closed, Erekat said.

Abbas' predecessor, Yasser Arafat, set up the investment fund in 2000 to calm an international outcry over a crony's diversion of hundreds of millions of dollars from the Palestinian treasury. Arafat appointed reformist finance minister Salam Fayyad to invest the money on behalf of the Palestinian Authority, but after Fayyad resigned to run for parliament in January, then-Prime Minister Ahmed Qureia took over the fund.

With the new Hamas Cabinet set to be sworn in on Thursday, Abbas intends to keep the fund under his office, a senior aide said on condition of anonymity because no official action has been taken yet.

It is not clear how much money is in the fund. An international audit in early 2005 said investments had brought the $900 million fund to $1.4 billion, but the PA has dipped into it to pay for ongoing expenses.

Abbas' control of the money would make financial matters even worse for the militants as they take over a government that has survived, in part, on international aid for its 12-year existence. The cash flow is expected to get tighter after Hamas takes power, because Western nations have threatened to withhold hundreds of millions of dollars in aid unless the group changes its violent ways.

Abbas' plan to set up a border crossings agency would be another power play. The crossings have so far been managed by the Ministry of Civil Affairs, which will now be run by the incoming Hamas government.

Israel has kept the Gaza Strip's main cargo crossing closed for most of the year, citing security threats. Palestinians claim they are being punished for Hamas' electoral victory, and until recently, rejected Israel's offer of alternate crossings while the Karni passage is closed.

Another main crossing, between Gaza and Egypt, is run by the Palestinians, with EU inspectors, who might prefer to deal with officials close to Abbas, rather than with Hamas. A presidential decree to establish the agency is sitting on Abbas' desk, but he has not yet signed it, said his aide. Abbas is attending an Arab summit in Khartoum, Sudan, and is expected back in the West Bank next week.

Abbas: Peace deal can be reached within one yearA peace deal to end the Israeli-Palestinian conflict can be achieved within less than a year, Abbas told Haaretz on Wednesday.

Speaking to Haaretz from the Muqata compound in Ramallah, Abbas said he had proposed to the United States to open covert negotiations for a final status settlement. The talks would be spearheaded by President George Bush, after the new Israeli government was set up.

To read the full interview with the Palestinian leader, click here.

Abbas said he had also raised the idea at a meeting with Shimon Peres (Kadima) two weeks ago in Jordan. However, a senior Palestinian source said Bush had not responded to Abbas' suggestion to pressure the new Israeli government to abandon its unilateral policy and resume the peace process.

Abbas said the Hamas government would not stop him from negotiating with Israel. If both sides reached an agreement, he would be the one to sign it and if necessary, would even put it to a referendum, he said. He said he would act to moderate Hamas and that at least one Hamas minister told him he would be ready to talk to Israel on ministerial issues.

Abbas said he feared Israel was not interested in negotiations and was avoiding them under the pretext of having no Palestinian partner.

The solution must be based on the 1967 borders, the PA chairman said, adding that he did not rule out territorial exchanges. He also said any solution to the refugee problem must be accepted by Israel.

Addressing the Israeli voter he said, "These are historic times. I can assure you that you have a peace partner. Perhaps this is the last chance to give both our nations the right to live safely. The future generations would not forgive us if we pass it up."

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