Rival Palestinian factions are holding talks in the Gaza Strip in a bid to ease tensions that have spiraled since the Islamic militant group Hamas took power nearly three months ago. At issue is the future of Palestinian relations with Israel and the international community.
Hamas and the more moderate Fatah faction are trying to hammer out an agreement that would avoid a showdown over a referendum on the idea of a Palestinian state alongside Israel.
Palestinian President and Fatah leader Mahmoud Abbas called the referendum a week ago in a bid to end the international isolation imposed on the Hamas-led Palestinian Authority.
American and European sanctions have left Hamas broke and unable to pay the salaries of 165,000 civil servants, which are three months overdue. But Hamas has rejected international demands to renounce violence and recognize Israel.
Since the referendum is based on a document calling for a Palestinian state to be established in the West Bank and Gaza Strip, it implies that Israel has a right to exist in other parts of the Holy Land. Mr. Abbas hopes that if he wins the July 26 vote, as expected, it would restore the flow of hundreds-of-millions of dollars in aid to the Palestinian Authority.
But Hamas, which seeks Israel's destruction, bitterly opposes the referendum. The group says it received a mandate for its policies when it won parliamentary elections by a landslide in January.
"The problem with the referendum [is] that Hamas sees it as an interference, intervening in the domestic, political process of the Palestinians and they will not allow that," said Israeli analyst Guy Bachor.
The referendum has deepened a power struggle between Hamas and Fatah. Gun battles, assassination attempts and kidnappings over the past month have left at least 20 Palestinians dead and raised fears of civil war.
But it appears that the sides are coming back from the brink. Officials say they are close to an agreement on the document implying Israel's right to exist. That would avoid the need for a referendum.
However, the document does not directly recognize Israel or renounce violence. So Israel says it is a non-starter.