Israel neither accepts nor rejects Hamas and Fatah agreements made Thursday in Mecca regarding a unity government, Prime Minister Ehud Olmert said at the opening of Sunday's cabinet meeting. "Israel insists that all of the Quartet's demands are met, as they were presented in the past," said the prime minister, referring to demands that the Palestinian Authority accept the existence of Israel, recognize past peace agreements made with Israel and renounce terrorism.
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Olmert said his government had "urgent consultations" over the weekend about the deal, but had not decided whether to reject or accept the agreements.
"We, like the international community, are studying what exactly was achieved, what was said, and what is the basis on which the agreement rests, if it exists, and if it's complete," Olmert said.
Earlier Sunday, officials in Jerusalem warned that Israel would cut off its ties with Palestinian Authority Chairman Mahmoud Abbas if the demands were not met.
In an interview with Army Radio Sunday morning, opposition head MK Binyamin Netanyahu agreed with this position.
"Hamas has not moved in the direction of Abbas," Netanyahu said. "Rather, he has moved in the direction of Hamas. If he gives legitimacy to Hamas, then that's bad; if we give legitimacy to Hamas, then that's even worse."
Further, senior government officials in Jerusalem said Saturday night that the Hamas-Fatah national unity government agreement reached in Mecca could jeopardize a trilateral Israel-Palestinian-US meeting scheduled for next week.
Olmert, Abbas, and US Secretary of State Condoleezza Rice are scheduled to hold a meeting on February 19.
Senior Israeli officials said Abbas's agreement to and appointment of a new government that does not accept the three international benchmarks made him a partner with Hamas, and called into question future Israeli cooperation with him.
The official said Israel was carefully assessing the situation and waiting to see what the new Palestinian Authority government's guidelines would be before making a final decision. "Maybe we will all be surprised," the official said skeptically.
The agreement, which took the form of a letter written by Abbas, calls upon Hamas to "respect international resolutions and the agreements signed by the Palestine Liberation Organization."
Sources in Jerusalem said that "respecting" agreements is not the same as "accepting them," and that the letter made no mention of recognizing Israel and renouncing terrorism. Some, however, argue that recognition of Israel is implicit in accepting previous agreements.
"What is needed," the government officials said, "is full recognition of Israel, acceptance of former treaties, and the stopping and renunciation of terror."
The officials said Israel was "stating very clearly that terror is continuing on a daily basis - the firing of rockets and the smuggling of arms into the Gaza Strip - and has never stopped. And as far as we can tell from the public declarations that were made by Abbas and Hamas after the agreement, the new government does not meet the three international benchmarks."
The officials said that Israel would not be able to set clear policy on the matter until the Palestinians published the new government's basic guidelines.
But in reference to a comment made by Ahmed Youssef, a Hamas political adviser to PA Prime Minister Ismail Haniyeh - who said on Saturday there would be no recognition of Israel - the official said these comments "are not exactly helpful, and are not in keeping to the international community's principles."
Olmert, who has not yet made any public comment on the matter, is expected to do so at the weekly cabinet meeting on Sunday.
Foreign Minister Tzipi Livni, meanwhile, was leading Israel's diplomatic charge over the weekend to convince the international community that the agreement should not lead to a change in the world's boycott of the Hamas-led PA.
At a speech to the 43rd Munich Conference on Security Policy on Friday, Livni said that the three conditions were "non-negotiable," and said Israel would not negotiate over its right to exist.
"The demand to abandon terrorism is not negotiable," she said. "Here in Munich, the city where 11 Israeli athletes were murdered, it needs to be understood that terrorism is terrorism is terrorism."
Israel's desire for peace "cannot come at the expense of its vital security interests," she said. She said that the international community must "show determination and say clearly to the Palestinians that they must accept the three benchmarks. Don't give legitimacy to unclear and clever agreements. You must impose the conditions on the Palestinians, and the truth must be told: the world must reject vague formulas."
Livni has spoken twice with Rice since the agreement was reached on Thursday, as well as with a number of other key international statesmen, including German Foreign Minister Frank-Walter Steinmeier, British Foreign Secretary Margaret Beckett and EU foreign policy chief Javier Solana.
The EU's foreign ministers are scheduled to meet Monday in Brussels and discuss this issue, and in advance of that meeting Livni discussed the matter in Munich with the foreign ministers of Austria, Sweden, the Czech Republic and Slovakia.
Sources in Livni's office said that there was an understanding of Israel's position, something that was reflected in a Quartet statement released on Friday, following telephone consultations between Rice, Solana, Steinmeier, European Commissioner for External Relations Benita Ferrero-Waldner, Russian Foreign Minister Sergei Lavrov, and United Nations Secretary-General Ban Ki-moon.
According to the statement, "While awaiting formation of the new Palestinian government, the Quartet reaffirmed its statement of February 2 regarding its support for a Palestinian government committed to nonviolence, recognition of Israel, and acceptance of previous agreements and obligations, including the road map."
The statement welcomed the planned trilateral meeting on February 19th, and said the Quartet representatives would meet two days later in Berlin to consider the recent developments and "review formation and implementation of the agreement on the government." The statement pointedly made no determination whether the Palestinian agreement met their three principles.
State Department officials told The Jerusalem Post that the block on funding to the Hamas-controlled Palestinian Authority would continue at least until the February 21 meeting.
In the meantime, the United States is considering its response to the Fatah-Hamas alliance, with administration officials saying they needed more details on the plan and the make-up of the new government.
But whereas senior Israeli officials said that the agreement may call into question the trilateral meeting, US State Department spokesman Sean McCormack stressed that there would be no change in Rice's trip on February 19 to hold three-way talks with Abbas and Olmert. In addition, there were no signs the unity deal would affect the $86 million allocated by President George W. Bush to help train and equip Abbas's security forces.
AP, Hilary Leila Krieger and Yaakov Katz contributed to this report.