Fatah and Hamas May 4 2011
Jubilant Palestinians releasing balloons in the colors of the Palestinian flag during a rally. Photo by AP
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Hamas and Fatah were preparing to implement a historic reconciliation deal on Wednesday, nearly seven years after a schism between the rival Palestinian factions.

"There has been great progress, and we are near ready to sign a deal, at 11 A.M.," Mounib Al-Masri, a member of Palestinian President Mahmoud Abbas' delegation in the Gaza Strip said. Sami Abu Zahawiri, Hamas spokesman in Gaza, issued a similar statement in an interview with Nazareth's Radio al-Shams.

Al-Masri said that the two sides had reached an agreement on all of the issues, including holding elections within six months. A unity government headed by Abbas would be created in the coming period, Al-Masri said.

The reconciliation deal is expected to be based primarily on the agreements signed by the factions in Cairo and in Doha.

The two sides have still not agreed on a few issues including the future of Hamas' security forces, which were created after the Islamist group seized power in a bloody 2007 coup in the Gaza Strip. It is not yet clear whether Hamas will agree to dismantle the forces or to allow them to be under the supervision and command of the Palestinian Authority's security forces.

Representatives of the movements met on Sunday in Cairo and according to reports from Egypt, they achieved “real progress” after Hamas agreed to give in on one of the fundamental conditions of the agreement, by which “all clauses of the agreement are to be viewed as a single entity.”

This condition had determined that elections for the legislative authority and the Palestinian National Council take place on the same day, but after all other clauses in the agreement have been met, which include the distribution of ministerial portfolios and focuses of power. Instead, Hamas will make do with a clause by which a temporary new leadership will be established for the Palestine Liberation Organization in which all of the Palestinian organizations will be represented, including Hamas and Islamic Jihad.

The parties also agreed to begin two weeks of talks on the establishment of a national unity government, and only thereafter to discuss a date for elections and the distribution of portfolios in the unified PLO leadership.

Meanwhile, Prime Minister Benjamin Netanyahu warned Wednesday in a meeting with Austrian Foreign Minister Sebastian Kurz that Abbas was moving toward making peace with Hamas at the expense of making peace with Israel – and could not do both.

Netanyahu told Kurz he hopes Abbas will choose peace with Israel over Hamas-Fatah reconciliation, but said that so far he has not done so.

The stalemate in Israeli-Palestinian peace talks is Abbas' fault, Netanyahu added blaming the Palestinian leader for imposing new conditions that he knows Israel cannot meet every time negotiations are about to be renewed.

"You're coming at an important time," Netanyahu said. "We're trying to re-launch the negotiations with the Palestinians. Every time we get to that point, Abu Mazen [Abbas] stacks on additional condition which he knows that Israel cannot give. So instead of moving into peace with Israel, he's moving into peace with Hamas. And he has to choose. Does he want peace with Hamas or peace with Israel? You can have one but not the other. I hope he chooses peace, so far he hasn't done so."

Economy Minister Naftali Bennett lashed out against the reconciliation deal and the "unity government of terror" that would emerge.

"Hamas will continue to murder Jews and Abu Mazen will continue to demand their release.Whoever think Abu Mazen is a partner should think again," Bennett said.

Foreign Minister Avigdor Lieberman echoed the sentiments of Bennett and Netanyahu: "It’s impossible to make peace both with Israel and Hamas, a terrorist organizations intent on the destruction of Israel," he said. "The signing of an agreement for a Fatah-Hamas unity government means the end of negotiations between Israel and the Palestinian Authority."