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Prime Minister Ehud Olmert said Sunday that the emerging Palestinian unity government must abide by international demands to recognize Israel, renounce violence and accept past peace agreements.

Olmert said Israel had not yet made a decision on how to respond to the agreement on a national unity government signed last week between Palestinian Authority Chairman Mahmoud Abbas, of Fatah, and the Islamic militant Hamas group.

However, his insistence that the three conditions be met signaled that Israel is not satisfied with the deal, and he hinted that Israel could downgrade its ties with Abbas if he enters a government with the militants.

Speaking at the opening of the weekly cabinet meeting, Olmert said that "Israel is not rejecting nor is it embracing the Mecca accord. Israel is studying the details of the agreement."

Olmert said he did not believe the agreement met the Quartet conditions, according to an official who was present at the cabinet meeting.

"We support the Quartet decisions, and we expect any Palestinian government to stick to those principles, meaning recognizing the right of Israel to exist, stopping terror activities, and accepting all agreements in a way that is clear, sharp, and explicit," the prime minister told reporters before the meeting.

Olmert told the ministers that he spoke recently to Russian President Vladimir Putin on the Mecca accord. The premier said he was pleased to hear from Putin that Russia is still backing the position of the Quartet on Middle East peace negotiations.

The prime minister's statement came after unnamed government sources said Saturday that Israel rejects the agreement. It said the accord is not in line with the Quartet of Middle East mediators' conditions - recognition of Israel, renouncing violence, and ratifying past agreements and the road map.

Government sources said Israel would insist on the three conditions, which are expected to be the focus of the tri-partite summit between Prime Minister Ehud Olmert, Palestinian Authority (PA) Chairman Mahmoud Abbas and United States Secretary of State Condoleezza Rice next Monday.

The sources said the controversy over the new Palestinian government and its accepting the Quartet's demands casts a heavy shadow on the triangle summit. Since the Palestinian government will not be formed by next Monday, the argument on the Mecca agreement will not cast doubt on the summit's existence. However, any progress in the peace talks is conditional on the Palestinian government's fulfilling the Quartet's demands, they said.

A political adviser to Palestinian Prime Minister Ismail Haniyeh of Hamas said Saturday that the unity government would not recognize Israel.

"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.

A senior source in Jerusalem said earlier Saturday that all the signs indicated that the new Palestinian government would not accept the Quartet's conditions, not even by implication.

He said the new government may raise other problems. "Until now there was a clear distinction between Abbas and the Hamas government and it was convenient for us to talk and make progress with one side. Fatah's entering the government would blur that distinction. The question would be raised whether to transfer funds to a government whose finance minister is Salam Fayyad."

Fayyad is a much respected leader in the United States and the international community.

Israel made a diplomatic effort over the weekend to prevent any of the Quartet's conditions from being watered down as a result of the Mecca agreement. The Quartet's foreign ministers issued a statement on Friday reiterating its demand that any Palestinian government 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 welcomes the role of the Kingdom of Saudi Arabia in reaching the agreement to form a Palestinian national unity government. The Quartet expresses hope that the desired calm will prevail," the group said in the statement released by the U.S. State Department after a Quartet conference call.

However, Russia on Friday welcomed the Mecca agreement to form a unity government and appealed for the freeze on direct aid to the Palestinian government to be lifted.

The Quartet's ministers will meet in Berlin in 10 days − two days after the Olmert-Abbas-Rice summit − to discuss the developments.

A senior Israeli source said the Quartet's statement made it clear that any Palestinian government must adopt the three conditions in full.

"At the end of the Mecca meeting, the Palestinians made no statement agreeing to those terms. The terror acts against Israel continue, including Qassams and smuggling munitions to Gaza and kidnapped soldier Gilad Shalit has not been released yet," he said.

Foreign Minister Tzipi Livni, who took part in a global security conference in Munich, met Javier Solana, the European Union's defense and security coordinator, German Chancellor Angela Merkel and the foreign ministers of Austria, Slovakia, Sweden and the Czech Republic. She spoke to Rice twice on the telephone as well as with her German, British and Norwegian counterparts.

Livni said the international community and Europe in particular must insist on the Quartet's conditions.

The cabinet on Sunday will discuss the implications of the Mecca agreement and hear intelligence surveys about it from the Shin Bet and Military Intelligence.

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