President Mahmoud Abbas said today that a Palestinian unity government could be formed by month's end, a move that he hopes would help lift a Western aid embargo and restart peace talks with Israel.
"I announce to our people the happy news, that we have achieved great progress on the path to establishing a national unity government that can end the siege and open the way toward a political settlement," Mr Abbas said in a speech marking the second anniversary of the death of his predecessor, Yasser Arafat.
"I expect that, God willing, this government will see light before the end of this month," he said.
The United States and Europe imposed crippling sanctions on the Palestinian Authority when Hamas Islamists ousted Abbas's formerly dominant Fatah faction in a January election.
Hamas advocates the Jewish state's destruction and helped spearhead a Palestinian revolt that erupted in 2000, though its armed wing has largely abided by a truce declared last year.
Hamas has balked at Abbas's demands that it soften its stand, but the president - who is embraced by Israel and Washington - has said that bringing Fatah into the government could be a means of defusing the diplomatic stand-off.