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© Abed Rahim Khatib/Flash90Head of the Hamas government Ismail Haniyeh and senior Fatah official Azzam Al-Ahmed attend a news conference as they announce a reconciliation agreement in Gaza City on April 23, 2014.

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Israel has reacted with fury to the "reconciliation" deal agreed on last week between the rival Palestinian bourgeois parties, Fatah and the Muslim Brotherhood Hamas.

Speaking on Sunday, Israeli prime minister Benjamin Netanyahu called a halt to the so-called peace talks with the Palestinian Authority (PA) president Mahmoud Abbas unless he "tears up" the pact with Hamas.

Fatah and Hamas had agreed to form an interim unity government in the next five weeks and to fix a date for elections later this year.

The deal was negotiated by Moussa Abu Marzouk, deputy head of Hamas's politburo, and Azzam al-Ahmad, a Fatah central committee member, following informal talks in Cairo between Palestine Liberation Organisation (PLO) delegates and Marzouk. Discussions were also held in Qatar, a major sponsor of the Muslim Brotherhood offshoot, and with European officials.

Fatah and Hamas, which control the West Bank and Gaza Strip, respectively, have long been bitter political rivals, coming close to all-out civil war, with Hamas refusing to recognise Israel.

When Hamas won the Palestinian elections in January 2006, it was branded a terrorist entity by Tel Aviv and Washington and subjected to economic sanctions. In June 2007, it took power in Gaza to forestall a coup led by Fatah and planned by Israel and the US.

But its perspective of an Islamist capitalist state was no more viable than that of its secular rivals. Now, after years in which it advanced itself as a militant opposition to Fatah's collusion with Israel, Hamas is ready to embrace Israel's chief subcontractor, and by extension Israel itself.

Netanyahu cynically seized on the announced deal to cancel a negotiating session with Fatah scheduled for April 23, saying, "Whoever chooses Hamas does not want peace," and describing Hamas as "a murderous terrorist organisation that calls for the destruction of Israel."

Netanyahu's denunciation of the agreement flies in the face of his often repeated and cynical claim that the division of the Palestinians made any deal with Fatah meaningless.

Moreover, he has been willing to work with the Muslim Brotherhood when it suited Israel's interests to do so. Hamas, no less than Fatah, acts as the guarantor of Israel's security. It maintains an informal ceasefire with Israel that it enforces on other militant groups in Gaza, in what has become a virtual police state. This, in turn, has caused its political support to plummet.

In fact, the agreement will have no effect on any talks with Israel. According to a statement released by the PLO, the new government would continue to seek a negotiated deal with Israel, support non-violence to end the occupation and uphold previous agreements signed with Israel. These are Washington's three conditions for endorsing any new Palestinian government.

Crucially, it was Netanyahu himself, with Washington's complicity, who had torpedoed "peace" talks last month when he refused to release 26 Palestinian prisoners held in Israeli jails, as agreed in July 2013. From the start, the talks been a charade with little of substance discussed and no face-to-face meetings with the Palestinians since November.

Tel Aviv has threatened to withhold tax revenues it collects on the Palestinian Authority's behalf. This would effectively collapse the PA, given that Ramallah depends on these to pay salaries and take other measures.

Israel's stance was backed by Washington. US State Department spokeswoman Jen Psaki described the unity deal as "disappointing," stating, "It's hard to see how Israel can be expected to negotiate with a government that does not believe in its right to exist." She hinted that US aid to the PA, worth $400 million annually, might be in jeopardy. The United Nations, Russia, the European Union and Iran have supported the agreement between Fatah and Hamas, which is essentially the same as that brokered by Egypt on previous occasions.

It stipulates that the two will form an interim government made up of "technocrats" chosen by both parties. They will fix a date and prepare for the election of a president, legislative assembly and the Palestinian National Council - the PLO's legislative body - within six months of the new government taking office. Joint committees will organise the integration of Hamas and Islamic Jihad into the PLO, and of Fatah and Hamas's security forces that now number 50,000.

Hamas immediately released 10 Fatah detainees accused of security violations, as a goodwill gesture. At the same time, it announced the arrest of a militant cell linked to Mohammad Dahlan, the former Gaza warlord and Abbas and Fatah opponent who is close to Israel. In Ramallah, Palestinian prime minister Rami Hamdallah offered his resignation to pave the way for a unity government.

Among the Palestinian people in both Gaza and Ramallah, the deal evinced little enthusiasm, with few celebrating on the street. Most were sceptical about whether it would be implemented - four previous agreements had failed - and what impact it would have, if any, on living conditions. The situation in both Ramallah and Gaza is characterised by economic hardship, arrests and detentions, none of which is likely to be ameliorated by the agreement.

The rival bourgeois factions of the Palestinians have both been exposed as politically bankrupt. Hamas's acceptance of reconciliation is bound up with its increasing isolation. Like Fatah, it was always dependent upon external support - from Saudi Arabia, Egypt, Jordan, Iran and Syria. But most of this has dried up. Having sided with the Western-backed rebels against the Syrian regime, Hamas was forced to close its foreign bureau in Damascus and move to Qatar, losing support from Syria and Iran.

The ouster of Egypt's president Mohammed Mursi by the military junta last July, and the proscription of the Muslim Brotherhood as a terrorist organisation by Cairo, Riyadh and elsewhere in the region, sealed its fate. Qatar, its last pillar of support, is also said to be bowing to pressure from Riyadh to curtail its sponsorship.

Cairo has to all intents and purposes backed Hamas into a corner. The new military regime, which presides over a bankrupt economy, is just as reliant on the US as the deposed regime of Hosni Mubarak. The junta has sealed its border with Gaza and destroyed 1,583 tunnels linking Gaza and Egypt, used to break Israel and Egypt's blockade. It accuses Hamas of aiding Sinai militants in northern Sinai who have launched more than 300 attacks on Egypt's pipelines, security forces and tourists since last July.

For months, Hamas has only been able to pay its 47,000 workers half their salaries, intensifying the economic hardship and deprivation. This ultimately has driven Hamas's realignment with the Abbas regime on the West Bank.

Abbas for his part has been utterly dependent on US and European aid, doing everything he could to eliminate Hamas and all opposition to Israel by arresting, detaining and torturing suspected Hamas supporters. The PA supported Israel's illegal blockade and its murderous assaults on Gaza's narrow coastal strip in December 2008 and again in 2012 to eradicate Hamas.

But to no avail. Washington and Tel Aviv had absolutely no intention of creating a viable Palestinian state, as the collapse of the latest round of talks demonstrates once again. As far as they were concerned, the so-called peace talks provided yet again a means of extending Israel's land grab and tightening its control over the Palestinian people via its subcontractors, the PA, while at the same time furthering US intrigues in the energy-rich region.

This has left Abbas's unpopular regime more isolated and exposed than ever. Abbas himself is aging and unwell, and seeking an exit strategy.

While Israel's political establishment has sought to make political capital out of the Fatah-Hamas rapprochement and to punish the PA for the deal, nothing can disguise the mounting social, economic and political tensions within the occupied Palestinian territories and Israel itself, generated by the global economic crisis.

As the deal was announced, Israel upped the ante by mounting air strikes on northern Gaza, wounding 12 Palestinians, including 2 children. Egypt for its part has put the entire Sinai peninsula under military control.