Fatah and Hamas shake hands on deal to form interim government JERUSALEM and GAZA  - AFP Palestinian President Mahmoud Abbas\'s Fatah movement and its bitter rival, the Islamist Hamas, struck a deal on Wednesday to form an interim unity

government and fix a date for general election, both sides said. The deal, which took many officials by surprise because of profound Fatah-Hamas divisions over how to resolve generations of conflict with Israel, was thrashed out in Egypt and followed a series of secret meetings. \"The two sides signed initial letters on an agreement. All points of differences have been overcome,\" said Taher Al Nono, the Hamas government spokesman in Gaza.

The Palestinian unity deal agreed in Cairo crossed \"a red line,\" Israel\'s Avigdor Lieberman said on Thursday, warning that an array of measures could be taken against the Palestinian Authority. \"With this accord, a red line has been crossed,\"the ultra-nationalist foreign minister told Israel\'s military radio a day after the Palestinian parties announced a surprise reconciliation agreement. \"We have at our disposal a vast arsenal of measures including the lifting of VIP status for Abu Mazen and Salam Fayyad, which will not allow them to move freely,\" he said referring to president Mahmud Abbas and his prime minister. \"We could also freeze the transfer of taxes collected by Israel for the Palestinian Authority,\" added Lieberman, who leads the Israel Beitenu party in the coalition of Israeli Prime Minister Benjamin Netanyahu.

After 18 months of largely fruitless reconciliation talks, delegations from Hamas and Fatah meeting in Cairo on Wednesday announced a deal to form an interim unity government with a view to holding presidential and legislative elections within a year. The deal raises the prospect of an end to the devastating political divide that has seen the Fatah-led Palestinian Authority govern the West Bank while the Islamist Hamas movement controls the Gaza Strip.

Commenting on news reports that Fatah and Hamas have reached a reconciliation agreement, Richard Burden MP, Chair of the Britain-Palestine All Party Parliamentary Group, said:‘All of us who want to see a peaceful resolution to the Israel-Palestine conflict should welcome this news of Palestinian reconciliation. It is especially positive that young people in Palestine have pushed so strongly for this reconciliation\". \"These non-affiliated youth groups have been inspired by pro-democracy movements across the region to organise demonstrations calling on Fatah and Hamas to reach this agreement. They are a new generation that provide hope for the future of a Palestinian state.\"

But the agreement was criticised by Israel, with Netanyahu warning on Wednesday, shortly after the deal was announced, that Abbas must \"choose between peace with Israel or peace with Hamas.\" Lieberman said the reconciliation deal would mean the \"freeing of hundreds of Hamas terrorists detained by the Palestinian Authority in Judaea and Samaria\" -- the biblical name for the West Bank. He said the elections envisaged under the agreement would allow Hamas \"to take control of Judaea and Samaria.\" Lieberman said he wanted to see the international community insist that any unity government comply with conditions announced by the Middle East peacemaking Quartet, which includes the United Nations, United States, European Union and Russia. \"We hope that the whole international community will maintain the conditions imposed by the Quartet on the Palestinians, which means an end to violence, recognition of Israel and past agreements, and Hamas does not accept any of these conditions,\" he said.

Israeli Defence Minister Ehud Barak said \"the latest events do nothing but reinforce the necessity of relying only on ourselves. \"The army and the security services will use an iron fist to deal with any threat and challenge,\" he warned.