The prospect of a peace summit between Palestinian Authority Chairman Mahmoud Abbas and Interim Prime Minister Ehud Olmert was shot down by Israel Wednesday almost as soon as it was floated by the Palestinians. Speaking in Norway, where he was looking to raise funds for the empty PA coffers, Abbas said he was ready to lead Palestinian negotiations at an international peace summit in his capacity as the chairman of the Palestine Liberation Organization, which is officially the "sole legitimate representative" of the Palestinian people according to international agreements. "An international conference should be summoned immediately, in which direct negotiations take place, on the basis of international United Nations resolutions and signed agreements," Abbas said in a speech. He proposed that the summit be moderated by an international body like the Quartet, which would broker any agreement and be the arbitrator were disputes to arise. "It is important for me to clarify that the Palestinian legislative elections, which brought Hamas to power, (are) not an obstacle in front of negotiations," he said. However just hours later, a spokesman for Olmert categorically rejected the idea, saying no summit would take place until the PA reins in terrorism. "That's a 'no' with a capital 'N,'" Asaf Shariv said. "The summit is part of the second phase of the road map. Chairman Abbas has tried repeatedly to skip the first phase of the road map which obliges the Palestinians to stop terrorism." The Arab League's secretary-general also rejected the proposal - for now. "At one moment or another perhaps - not now - such an idea could be useful," Amr Moussa said. During his trip to Norway, Abbas did manage to secure a $20 million pledge from Norwegian Prime Minister Jens Stoltenberg. However, toeing the line established by Israel and the international community so far, the Norwegian leader said his government would not send the money directly to the Hamas-led PA, but rather look for ways to channel it through the UN or other international aide organizations. Meanwhile, reports emerged Wednesday that Fatah gunmen loyal to Abbas were setting up a new militia in response to the internal security force organized by Hamas, which conducted its first operations on Monday, arresting Fatah gunmen who briefly took control of the Health Ministry in Gaza. "The new force would aim to protect Fatah men against the Israeli enemy and against any attempt by any party inside the homeland to target them," Abu Saqer, a spokesman for the newly named Yasser Arafat Brigades, told Reuters. Control over the many Palestinian security forces has been the focal point of the escalating conflict between Abbas's Fatah movement and Hamas leaders who are trying to assert their control since winning the Palestinian Legislative Council elections in January. That conflict reached a fever pitch earlier this week when 40 people were wounded in clashes which erupted in Gaza after Damascus-based Hamas leader Khaled Mashaal accused Abbas of being "a traitor." Abbas fired back at Mashaal, calling him a "civil war monger" before the Gaza-based Hamas leadership stepped between the two to diffuse the situation. Nevertheless, Palestinian analysts are predicting that without a dramatic change in word and deed from Hamas and Fatah leaders, the two main Palestinian factions are headed toward violent confrontation in the not-too-distant future. "Things are moving in a very dangerous direction at this point," said Basem Ezbidi, a professor of political science at Bir Zeit University. Much of the conflict, Ezbidi said, is a result of the increasing pressure being exerted upon the Palestinians by the Israeli-led international boycott instituted against the Hamas-led PA. According to a report issued by the United Nations on Sunday, economic and humanitarian conditions in the Palestinian areas are already deteriorating as a result of the boycott and are set to worsen dramatically in the coming months. AP contributed to this report.