Palestinian President Mahmoud Abbas is holding talks with Hamas leader Ismail Haniyeh on forming a new Palestinian government. The talks are taking place amid a new escalation of violence in the West Bank, where Israeli troops killed a senior Palestinian militant.
Ismail Haniyeh has five weeks to form a government after being named prime minister. The Gaza-Hamas leader is seen as a moderate with close ties to many members of Mr. Abbas' Fatah Party.
Hamas controls 74 of the 132 seats in the Palestinian parliament, and could govern on its own, but leaders of the Islamic militant group say they would prefer to form a coalition government that would include members of Fatah, a prospect Fatah has been rejecting.
Mr. Haniyeh's first task will be to figure out how to pay about 140,000 Palestinian civil servants, who face a cutoff of their salaries next month, after Israel's Cabinet voted Sunday to halt monthly tax and customs transfers to the Palestinian Authority.
The transfers average about $50 million a month and make up about half the Palestinian Authority's estimated $116 million monthly budget. In a news conference, Mr. Abbas called the Israeli decision devastating.
Mr. Abbas says, in his meetings with Hamas leaders, he is keeping an open mind, and wants to hear from them directly about their plans for a future government.
International donors also say they will cut aid to the Palestinian Authority, unless Hamas agrees to recognize Israel and disarm. Hamas has refused to do so. The group is considered a terrorist organization by Israel, the United States and the European Union, and is responsible for many suicide bombings in Israel.
Violence has been escalating in recent days. Early Monday, Israeli troops shot and killed a senior commander of the militant group Islamic Jihad in the West Bank city of Nablus. The Israeli commander in charge of the operation told Israel Radio his forces caught the militants off guard.
The Israeli commander says the militant, Ahmed Abu Sharik, was involved in several attacks against Israeli soldiers, and had helped to plan a recent suicide bombing in Tel Aviv. The commander says operations against Islamic Jihad militants will continue in the area for several more days.
Israeli troops killed four Palestinians in two different incidents Sunday in the West Bank and Gaza Strip.