Fears of civil war as Hamas rulers reject Abbas peace plan ultimatum

Expiry of the deadline - at midnight tonight - without agreement, would set the stage for renewed, heightened violence between Hamas and Mr Abbas's Fatah movement, amid fears of an all-out civil war.

According to the ultimatum, issued on 25 May with a ten-day deadline, Hamas would have to agree to the principles of the peace plan, or the matter would be put to a vote in a national referendum.

Mr Abbas's spokesman, Walid Awad, said the president would issue an order tomorrow on the holding of a referendum, unless Hamas changed its stance at the last minute and agreed to the document's provisions. They include the formation of a national unity government and the establishment of a Palestinian state next to Israel.

Mr Abbas believes gaining wide Palestinian support for the document would enable him to thwart Israel's bid unilaterally to annex parts of the West Bank by refuting its claims that there is no Palestinian partner for negotiations.

But Hamas prime minister Ismail Haniya, in his strongest statement yet on the matter, said in Gaza yesterday the referendum idea was illegal.

"The local basic law and the advice we got from experts in international law say that referendums are not permitted on the Palestinian land," he said.

But Mr Haniya added that "from a political point of view, the holding of a referendum necessitates serious studies".

Mr Abbas was sending personal emissaries to Mr Haniya to get a final response from him, aides said. Hamas spokesman Sami Abu Zuhri said there had been no progress in the national dialogue that began on 25 May with the aim of reducing tensions between Hamas, which won control of parliament in the January elections, and Fatah, the traditional ruling party headed by Mr Abbas, who still enjoys considerable powers as president.

Mr Abu Zuhri said the peace plan, drawn up by a leading Fatah member and a leading Hamas prisoner, "includes positive points", but said the movement opposed wording which "includes recognition of the occupation at the expense of the rights of our people".

Hamas, whose charter calls for Israel's destruction on the grounds that all of historic Palestine is sacred Islamic territory, has refused to give in to international demands that it recognises Israel, renounces violence and upholds existing Palestinian Authority agreements with the Jewish state.

As a result, international assistance has been withheld and the Palestinian territories have been plunged into a severe economic crisis, endangering the existence of the government because it is unable to pay its 165,000 workers.

Yesterday saw signs of relief when a Palestinian bank began paying some government workers a month's salary, despite threats of sanctions against institutions dealing with the Hamas government.

Mr Abbas said in setting the deadline that a solution to the political and economic crises facing the Palestinian Authority was urgent, and could not be delayed. But Mr Abu Zuhri said yesterday: "We reject a deadline because it is illogical that a remedy can be found in ten days for Palestinian differences that date back ten years." He called the referendum "a waste of money at a time when our people are starving".

Mr Awad insisted that holding a referendum was "valid and legal".

He said: "The mechanism to begin a referendum has started already. The president has met with the election committee during the past 24 hours."

Hani Masri, a Palestinian analyst, said it was likely Mr Abbas would call the referendum, but might wait a few more days. He predicted this would lead to intensified clashes between Fatah and Hamas, which resulted in 11 fatalities last month.

"Hamas has an interest in escalation, in creating an atmosphere where the referendum cannot be held," he said.

The weekend saw the first appearance of a new Fatah militia. More than 2,000 men marched through the West Bank town of Jenin on Saturday - a rival force to a 3,000-strong Hamas militia.

Israeli prime minister Ehud Olmert, meanwhile, said before heading for talks in Egypt with president Hosni Mubarak that a plan involving recognition of a Palestinian state based on 1967 borders "contained nothing new".