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Palestinian Coalition Dismantled; Olmert Taps Barak (Update2)

By Jonathan Ferziger and Saud Abu Ramadan

June 16 (Bloomberg) -- A power struggle among Palestinians intensified as the emergency government declared by the leadership in the was rejected by , which took control of the in bloody clashes this week.

Israel sought to contain potential threats from Gaza, appointing former Prime Minister as its new defense minister. Prime Minister Ehud Olmert leaves tonight for the U.S., where the emerging Palestinian crisis will be at the center of his June 19 White House talks with President George W. Bush.

Palestinian Authority President of Fatah named independent lawmaker Salam Fayyad prime minister of an emergency government he called after dismantling a unity coalition with the Islamic Hamas. Hamas's Ismael Hania, who was prime minister of the jointly run government, said he would not step down.

''We are the legitimate government, which is leading the democratically elected parliament,'' Hania said in an interview with the French newspaper Le Figaro published today. ``We will make law and discipline rule in Gaza."

Abbas's decision to dismantle the Palestinian cabinet came after nine days of fighting left at least 130 dead, according to the Palestinian Health Ministry. Hamas fighters took over Fatah security positions, including a compound that holds Abbas's residence and offices in Gaza. His home and that of Mohammed Dahlan, the national security adviser, were looted.

With security guards having abandoned their posts, Gaza residents also ransacked the former home of Yasser Arafat, the Palestinian leader who died in a Paris hospital in 2004.

Strategic Failures

Olmert expedited yesterday's appointment of Barak, 65, a retired general and military chief of staff, in response to the events in Gaza. He replaces , who offered his resignation yesterday.

The state-appointed criticized Olmert and Peretz in April for strategic failures during last year's war in Lebanon, calling attention to their lack of military experience.

``Barak will provide a steadying hand in the Defense Ministry,'' Daniel Kurtzer, former U.S. ambassador to , said on Bloomberg TV. ``This is important as, in addition to diplomatic steps, Israel has to secure itself.'' He said Gaza may be ``a terrorist state in the making.''

Miri Eisin, a spokeswoman for Olmert, said the prime minister and Bush will try to make ``a realistic assessment'' of the Gaza situation and seek ways ``to empower the moderates.''

Talks were under way to select more ministers for the Palestinian emergency government, which Fayyad told reporters in Ramallah would be announced by noon tomorrow.

End to Unity

The fighting between the two factions left Gaza residents in a near-crisis, the said yesterday in a statement, warning that the 1.5 million Palestinians in the strip will begin running out of food in a week. Only emergency treatment is being provided by hospitals, four of which were fired on during the violence, the World Health Organization said.

The Hamas takeover of Gaza, while the secular Fatah retains control of the West Bank, may mark the end of Palestinian unity. It also creates a dilemma for Israel and powers such as the U.S. that

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have been involved in the Middle East peace effort, and may further delay resumption of aid to the Palestinians.

The U.S. said it approved of Fayyad's appointment. ``This is a person that the international community has long experience with, has great confidence in,'' State Department spokesman Sean McCormack said in Washington yesterday. ``He has a sterling reputation.''

Gauntlet Thrown Down

Kurtzer said that much depends on how the West reacts. ``The gauntlet has been thrown down and the question is what Abbas does now and what the rest of us do to support him.''

Olmert pledged in a phone call to Egyptian President to do what was possible to aid ``the moderate forces in the Palestinian Authority,'' his office said yesterday.

While Fatah favors talks with Israel, Hamas is sworn to Israel's destruction and is designated a terrorist organization by the U.S. and the . The Western powers imposed a ban on aid to the Palestinian government after Hamas formed a government early last year, following its victory in legislative elections.

Other than several meetings between Olmert and Abbas that failed to bring progress, peace talks have stalled.

``Hamas's control of Gaza offers Israel an opportunity to break the political stalemate by establishing a Palestinian address in the West Bank under the control of Fatah,'' Gidi Grinstein, founder and president of the non-partisan, non-profit, privately funded Reut Institute, said in an e- mailed statement.

The EU, which this week suspended humanitarian aid to Gaza for the first time, condemned Hamas's seizure of the area and backed Abbas's measures, according to an e-mailed statement from the German presidency. Germany holds the current six-month rotating presidency of the EU.

While Fatah agreed in February 2006 to become a junior partner in a government led by Hamas's Hania, the two movements didn't settle their differences over Israel or stop the fighting between their loyalists.

Fatah, which is a secular and nationalist movement, retained control of Preventive Security and other police agencies, while the Hamas-led Interior Ministry formed its own security force in Gaza to buttress its militia.

Former Official

Fayyad, who was born in 1952, is a former World Bank and International Monetary Fund official who was brought in as finance minister in 2002, when Yasser Arafat ruled the Palestinian Authority, to clean up corruption and waste. He isn't a member of Fatah and ran as an independent in the 2006 legislative elections.

In an apparent gesture of goodwill, Hamas called for the release of British Broadcasting Corp.'s Alan Johnston, who was abducted in March, and said it was working with his captors for his freedom.

To contact the reporter on this story: Jonathan Ferziger in at [email protected] .

Last Updated: June 16, 2007 09:19 EDT

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