Palestinian Authority Chairman Mahmoud Abbas said Wednesday that the United States had assured him that the formation of a Palestinian unity government would bring the end of its political and aid embargo on the PA, and of Israeli military operations in the Gaza Strip. Abbas made the remarks to the London-based news agency Al-Shark al-Awsat.

U.S. sources told Haaretz that the Bush administration expects the formation of a unity government which meets the demands of the Quartet - recognition of Israel, renunciation of terror and acceptance of prior PA agreements with Israel - and which can be a partner in negotiations.

Asked if he had discussed the matter in his meeting Tuesday with U.S. envoy David Welch, Abbas said he had received clear information on the issue of the embargo.

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Egyptian President Hosni Mubarak also said that the formation of a unity government would bring the embargo to an end, a spokesman for Abbas said.

Abbas added that he would be willing to meet with Prime Minister Ehud Olmert anytime and anywhere, and that the staffs of both leaders were making preparations for such a meeting.

Abbas is to arrive in Gaza on Thursday to meet with PA Prime Minister Ismail Haniyeh for talks over the PA unity government.

Sources close to the two leaders said yesterday that the talks were moving ahead.

By the weekend Haniyeh may announce his resignation and Abbas would announce the formation of a new cabinet of technocrats led by Mohammed Shabir, the candidate acceptable to both Fatah and Hamas.

However, Palestinian sources said delays might result from disagreements between the two sides or because of a major Israeli action in Gaza following the Qassam attacks.

Sources close to Abbas said Wednesday that the military wing of Hamas had increased Qassam fire to halt the talks between Haniyeh and Abbas.

Abbas on Wednesday called on Israel to resume negotiations toward a final peace settlement, insisting on a full Israeli pullout from the West Bank, Gaza Strip and east Jerusalem.

In a prerecorded speech broadcast on Palestinian TV, Abbas appealed to Israel, "Don't waste the chance of peace." He said a solution depends on Israel "recognizing our national rights, withdrawal from our lands and our Jerusalem, implementation of the international resolutions and finding a just solution and agreed upon to the issue of refugees."

Arab leaders and top U.S., European and United Nations diplomats held key talks in the Egyptian capital on Wednesday in an attempt to revive the Arab-Israeli peace process, even as Palestinian rocket attacks killed one person in Sderot and left two seriously wounded.

The attack came shortly before Egyptian President Hosni Mubarak met with Abbas in Cairo for talks on forming a new Palestinian national unity government key to reviving peace hopes.

In their meeting, Mubarak told Abbas that Palestinians should "speak in one voice" and express "positions that advance the peace process and end Palestinian suffering."

On Tuesday Abbas met with Jordanian King Abdullah and American envoy, Assistant Secretary of State David Welch. Welch also held talks with Arab League chief Amr Moussa before he joined the Quartet meeting, being held at the Russian Embassy.

Later on Tuesday, representatives of the Quartet - the U.S., European Union, Russia and United Nations - met in Cairo to discuss how to relaunch the peace process long stalled by Israeli-Palestinian fighting.

It was the first gathering of the Quartet since the Palestinian militant group Hamas formed its government following its landslide victory in the January legislative elections, throwing the peace process into crisis.

The United Nations envoy to the Middle East, Alvaro De Soto, told Haaretz that the Quartet maintained its September 20 position supporting the establishment of a PA unity government, in the hope that it would reflect the Quartet's principles: recognition of Israel and of previously signed agreements with it, and a renunciation of violence. De Soto said he was "encouraged" by the progress toward a new Palestinian government.

Meanwhile, a European diplomat revealed that there had been disagreement between the U.S. and the other members of the Quartet over the PA unity government. The U.S. is promoting a position that there will only be cooperation with the new government if it meets the conditions, while the diplomat said the principles are not pre-conditions as far as Russia and some of the European Union countries were concerned.

A Hamas spokesman in Gaza, Ismail Radwan, said Tuesday that Abbas has given the group guarantees that Arab countries and other members of the international community would end the economic boycott of the PA once a new government is formed, even if it still refuses to recognize Israel.

Radwan added he has no fear of the boycott not being lifted, since "the American government is in a deep domestic and foreign crisis.

"The new government has not been asked to recognize the Zionist enemy," Radwan told Haaretz on Tuesday.

Moussa Abu Marzouk, the deputy chair of Hamas' political bureau, also said that the new government "has not been asked to recognize Israel, and therefore will not recognize it."

In response to these statements, senior officials of Abbas' Fatah movement said they fear that Hamas' leadership, which resides in Damascus, is once again trying to torpedo the emerging agreement on a unity government.

"Every time we are on the verge of an agreement, a group in Hamas arises and tries to undermine the agreements," complained Maher Makdad, Fatah's spokesman in Gaza. "It's very possible that Abu Marzouk's statements were aimed at foiling the establishment of a unity government."

Hamas, Makdad continued, "must understand that the new government will be the PA chairman's government. Whatever government is established will have to accept and carry out the letter of appointment that Abu Mazen [Abbas] gives it, including a complete diplomatic program: Abu Mazen's speech to parliament, the agreements signed by the PLO and the Prisoners' Document."

The speech in question demanded that any new government accept the road map peace plan and the two-state solution.

Nevertheless, Makdad said, he is optimistic that an agreement with Hamas will ultimately be signed, as much progress has already been made.

But one of Abbas' associates took a gloomier view, saying he feared internal struggles among Hamas' overseas leadership could end up torpedoing the unity deal.

Khaled Meshal, who heads Hamas' political bureau, has actually approved many elements of a deal, the Abbas associate said.

"We agreed that the division of portfolios among Fatah and Hamas would be nine for Hamas, six for Fatah and nine for ministers with no party affiliation or members of the small organizations," he said. "Meshal also agreed to accept the principles of Abu Mazen's letter of appointment. But now, it seems that Abu Marzouk is trying to undermine the agreements with Meshal. He has joined with Prime Minister [Ismail] Haniyeh, who is insisting on retaining his position, and the 'Gaza group' [Abu Marzouk, Haniyeh and Interior Minister Said Sayeem] is not interested in giving up their membership in the government."

In response, Radwan said: "We do not intend to react to Abu Mazen's letter of appointment now. There will be a new letter of appointment based on the talks between the factions and the understandings they have reached."

Radwan added he has no fear of the boycott not being lifted, since "the American government is in a deep domestic and foreign crisis, while among the European states, there is a bitter dispute over continuing the siege."