CAIRO (Reuters) - Rival Palestinian groups are bogged down in talks over the shape and agenda of a national unity government that is supposed to prepare for parliamentary and presidential elections, delegates said on Sunday.
Diplomats and analysts see the success of the Egyptian-sponsored talks as key to reuniting Palestinians after 21 months of schism between Hamas-ruled Gaza and the West Bank, where the Fatah group of President Mahmoud Abbas holds sway.
Fatah and Hamas, the largest two Palestinian groups, differ fundamentally on how to deal with Israel. Hamas believes in armed struggle, though it is willing to consider a truce, while Abbas says negotiations with the Jewish state are the way to go.
Participants said differences remained between Fatah and Hamas on whether the unity cabinet that would emerge from the talks be composed of political groups or non-partisan technocrats, as demanded by Western powers and Egypt.
"It is a standstill on the issue of the government," said Walid al-Awad of the communist People's Party. He said there were also differences on the electoral law and the timing of the legislative and presidential elections.
The groups agreed on Feb. 26 to form five committees to also tackle issues such as the composition of security agencies in the Gaza Strip and the West Bank. The committees began their work on March 10.
Awad said two committees discussing national reconciliation and the reform of the Palestine Liberation Organisation (PLO) concluded their work on Saturday.
The PLO, dominated by Abbas and the groups loyal to him, have represented the Palestinians since 1964 but the more recently created Islamist movements, such as Hamas and Islamic Jihad, have never been part of it despite a 2005 agreement to bring them under its umbrella.
In Gaza, Hamas official Taher al-Nono told Reuters: "There was progress in some issues last night. There is an optimism, a cautious optimism."
"Still the issues of the government and elections remained (unresolved)," he said.
Egyptian intelligence chief Omar Suleiman last week urged the groups to reach an agreement on forming a technocratic government within a few days.
The West had shunned a previous unity government headed by Hamas after the Islamist group won parliamentary elections in 2006. Many Arabs and Palestinians said Western powers were punishing the Palestinians for their democratic choice.
Palestinian Prime Minister Salam Fayyad said this month he intended to resign by the end of March to pave the way for the formation of a unity cabinet. Abbas, who appointed Fayyad after Hamas routed Fatah in Gaza in June 2007, asked him to remain in office until results emerged from the talks in Cairo.
Wasil Abou Youssef, secretary-general of the Palestine Liberation Front, said a committee comprised of the heads of each delegation and Egyptian officials would meet on Sunday to discuss the unresolved issues of the government and elections.
The new government is also expected to lead efforts to reconstruct the Gaza Strip after Israel's three-week military offensive, which ended in January. The military operation killed some 1,300 Palestinians. Thirteen Israelis were also killed.
Awad said his party has put forward a suggestion that the prime minister and six cabinet ministers -- foreign affairs, interior, reconstruction, education, information and finance -- be held by independent ministers. The remaining seats would be decided on political basis, he added.
(Additional reporting by Nidal al-Mughrabi in Gaza)