Israel's minister of foreign affairs welcomed news on Friday that Palestinian Prime Minister Ismail Haniyeh from Hamas may step aside and allow the Palestinian Authority to form a moderate government willing to work with Israel.
"There is hope for the moderates, those who believe in the two-state solution," Tzipi Livni, who is also deputy prime minister, told reporters while on a visit to Los Angeles.
Earlier on Friday, Haniyeh said in Gaza that he may not head a unity government Hamas was trying to forge with the rival Fatah faction as a way to lift a Western embargo.
"When the issue of the siege is on one side, and my being prime minister is on the other, let the siege be lifted to end the suffering of the Palestinian people," Haniyeh said, referring to the sanctions that have caused widespread hardship in the West Bank and Gaza Strip.
Haniyeh's comments came a day after Abbas spoke on the phone with his main political rival, Hamas' supreme leader Khaled Mashaal -- their first conversation since April. Hamas spokesman Fawzi Barhoum said their discussion indicated the sides were nearing agreement.
The program of the proposed new unity government is vague on the key issue of recognizing Israel, calling for a Palestinian state on only the lands captured by Israel in the 1967 Mideast War. Hamas' charter calls for an Islamic state on those lands as well as Israel.
While Livni was optimistic of a breakthrough, she also urged the international community to remain tough with Hamas.
The US and Europe imposed sanctions on the Palestinian Authority when Hamas took power in March because of the group's refusal to recognize Israel and renounce violence. Israel also withheld tax and customs receipts.
She said Israeli Prime Minister Ehud Olmert wanted to meet with Palestinian Authority President Mahmoud Abbas of Fatah to move the process along.
"The idea is to strengthen Abu Mazen [Abbas] in order to give him the possibility to send a message to the moderate Palestinians that there is another way, not only the Hamas way but also his way," she said.
On Thursday, Olmert said Abbas would be surprised by what Israel could offer him, but did not elaborate.