AL QUDS: A new Palestinian unity government could widen a rift between the United States and the European Union and fracture an economic blockade of the Hamas-led administration.

Washington does not want to lift international sanctions until the government recognises Israel, renounces violence and abides by interim peace deals, the conditions set by the Quartet of Middle East mediators, Western diplomats and analysts said.

But at least some in the European Union are signalling a willingness to settle for less from the administration that Hamas Islamist militants and moderate President Mahmoud Abbas agreed on Monday to begin putting together, diplomats said.

As a first step, the Europeans could reach out to non-Hamas ministers in the unity government, then try to roll back an embargo that has prevented 165,000 Palestinian government workers getting their salaries and fuelled fears of civil war, the diplomats said.

“This unity government serves one main purpose: to break the economic siege,” said Mouin Rabbani, senior analyst for the International Crisis Group. “But the jury is still out on whether it is going to achieve that.”

Monday’s deal left many questions unanswered.

A Hamas spokesman said the group had no intention of recognising Israel’s right to exist. Hamas also wants Ismail Haniyeh, the current prime minister, to stay in the post.

That will not go down well in Washington, which had privately urged Abbas to sack Haniyeh’s government, not join it.

US officials had warned Abbas’s Fatah faction that it would be shunned too if it joined a government that did not accept the Quartet’s three conditions.

Abbas’s partial salary payments to government workers, including Hamas ministers, upset the Bush administration.

David Makovsky, a senior analyst at the Washington Institute, said there was a growing sense within the US government that Abbas has been “complicit in assisting Hamas rather than serving as a counterweight.”—Reuterrs