Abbas meets Meshaal in Cairo Monday for talks on govt. formation

World Bank committed to offering $55 million to Palestinian National Authority annually

Livni says Netanyahu, Barak endanger Israel’s security

Main suspect of 2009 al-Hussein bombing captured

Palestinian officials said on Tuesday they would be ready to unveil a new unity government at a meeting between Palestinian President and Fatah leader Mahmoud Abbas and Hamas leader Khaled Meshaal in Cairo next week.

Leaders from the two factions met for several hours in Cairo Tuesday to discuss forming the new government, which Palestinians see as crucial for efforts to seek statehood in September.

Palestinian officials said the talks, headed by Fatah Central Committee member Azzam al-Ahmed and Hamas's deputy politburo head Moussa Abu Marzook, agreed on the release of prisoners held by the two factions and made progress on forming a new government, but had yet to agree on a prime minister.

"The prime minister's name and those of the ministers will be announced before the people Tuesday (next week)," Meshaal's deputy, Moussa Abu Marzook, told Reuters in an interview.

He said Abbas and Meshaal would be in Cairo to announce the new government.

Under a reconciliation accord reached in April, the rival factions agreed to form a government of technocrats, consisting of ministers without party affiliations, to prepare for general elections within a year.

Fatah nominated Salam Fayyad, an internationally respected former World Bank economist who heads the Palestinian government in the West Bank city of Ramallah, for the post of prime minister, but Hamas rejected Fayyad's nomination.

Fayyad supporters say his standing abroad was an asset for the Palestinians in ensuring the continued flow of international aid and in pursuing a bid for U.N. recognition of Palestinian statehood, expected in September.

Israel has said the reconciliation accord, brokered in secrecy by Egypt, would not secure peace in the Middle East and urged Abbas to carry on shunning Hamas.

Hamas, an Islamist movement, won Palestinian elections in 2006 but Fatah continued to control the West Bank while Hamas beat Fatah in a brief civil war in the Gaza Strip in 2007 and has governed Gaza since then.

The United States has criticized the accord but said it would look at the composition of the new government. Al-Ahmed declined to say why Hamas had rejected Fayyad's nomination but said the subject had been discussed thoroughly.

"We had already agreed that the government will be formed by consensus. We have discussed this subject thoroughly and in a practical manner," he said.

"Thus, we decided to continue next Tuesday and with the participation of Abbas and Meshaal," he added.

Abu Marzook said problems facing the establishment of the new government were that the Palestinian Authority was dependent on foreign aid, and that the new government must be acceptable to different powers.

"The United States is putting its conditions and Europe wants to wait to see the government (before it will) announce its position ... and this is the difficulty," he said.

Meanwhile, the World Bank Monday pledged $55 million annually for the support of the Palestinian Authority and another $20 million for the reconstruction of Gaza infrastructure.

Of the $55 million, $40 million will go for budget support and $15 million for development projects.

The World Bank decision came during a consultation meeting between Minister of Planning Ali Jarbawi and World Bank Country Director for the West Bank and Gaza, Mariam Sherman.

The two sides discussed necessary coordination techniques between the PA and World Bank to exchange essential information.

Jarbawi said that it was important to conduct meetings with donor countries in order to facilitate coordination for directing World Bank funds for projects of national priority.

Sherman said that World Bank policy aims to enhance government institutions to be able to provide Palestinians with significant amount of services.

She said that these consultations reflect World Bank interest in PA programs, which aim to develop Palestinian institutions.

The World Bank supports a number of health, education, social services and water sector projects.

Overall World Bank financial support to the PA between 2009 and 2011 amounted to $168 million to support development projects in the West Bank and Gaza.

On the other hand, opposition head in Israel, leader of the Kadima Party, Tzipi Livni, stated that Israeli Prime Minister, head of the Likud Party, Benjamin Netanyahu, is a danger to Israel as he wants to push it back to the 1948 border.

In an interview with Israeli daily, Yedioth Aharonoth, Livni said that both Netanyahu and Defense Minister Ehud Barak, will lead Israel to become a bi-national state, and that their act are preventing the establishment of the “Jewish State”.

“I said that in many occasions, Barak and Netanyahu are a threat to the state”, she added, “I still believe so, but when the statements come from a person who left a security career to become a politician, the issue will have great impact on the Israelis”.

She also stated that Netanyahu is not doing anything to protect the security of Israel “while Iran and its supporters are increasingly becoming a more serious threat to the region and to Israel”.

Livni said that former Mossad Chief, Meir Dagan, “did not reveal a secret when he spoke of the Iranian threat”, and that his statements came “after he realized the danger Israel is facing as he gained this knowledge through his work with Netanyahu and Barak”.

She added that when she says that Netanyahu and Barak are a threat to Israel, she means that “it became clear that were are in a path where changes are surrounding us, as Israel is isolated, and this isolation harms its security”.

“Netanyahu is doing nothing to change the situation, Israel is now in its worst position since its establishment in 1948”, Livni added, “When Netanyahu says the struggle is not on the 1967 border but on the 1948 border, he is indeed the one who is leading us there”.

The opposition leader further stated that the policies Barak and Netanyahu are policies of failure, and that “the dream of establishing a Jewish State is in danger, while Netanyahu is not doing anything to save it”.

She said that Netanyahu must engage in peace talks with the Palestinians, and must start these talks very soon. “If he does, I promise to support him politically”, Livni said, “He is afraid to lose his right-wing coalition partners, and wants to please them”.

Livni also stated that Netanyahu lies to the people when he says the United States and President Obama want Israel to withdraw to the 1967 border.

“Neither Obama, nor Hilary Clinton, want us to withdraw to the 1967 border”, she said, “Nobody is demanding us to do so, not even the Palestinians”. Her statements were hinting the probability of a land swap deal with the Palestinians so that Israel can keep its settlements in the occupied territories.

She demanded Netanyahu to declare that he wants to hold peace talks with parties that accept the conditions of the Quartet Committee that calls for recognizing Israel and signed peace agreements, and renouncing violence.

Livni concluded by stating that the current situation in Israel can be ended, and that Israel can exit its state of isolation by holding early general elections.

The Palestinian Liberation Organization (PLO) recognized Israel before signing the first Oslo agreement in 1993, but Israel has never made any official statement recognizing the Palestinian right to a sovereign state and still refuses to recognize all related Security Council and United Nations resolutions calling for the Right of Return of the Palestinian refugees and Israel's full withdrawal from Arab and Palestinian territories, including occupied East Jerusalem.

In Cairo, Egyptian security forces have captured the main suspect in a 2009 bombing at a popular tourist bazaar that killed a French teenager, security sources said on Sunday.

The bombing in the crowded 14th century Khan al-Khalili market also injured at least 25 other people. It was the first fatal attack on tourists in Egypt since bombs killed at least 23 people at an Egyptian resort in the Sinai peninsula in 2006.

Security sources said the 39-year-old Egyptian, identified as Khaled Mahmoud Mostafa, had repeatedly traveled illegally to the Gaza Strip to join Palestinian "terrorist groups".

"He was captured about a week ago as he frequented his home in Beni Suef," a security source told Reuters, referring to a province south of the capital Cairo.

The source said Mostafa, who was being questioned, had "entered Egypt and left for Gaza in an illegal manner".

Smugglers use tunnels to cross the border into Gaza.

Egyptian security sources had said remains of the bomb used in that attack resembled another bombing at a church in Alexandria on New Year's Day in 2011 that killed 23 people.