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Last Updated: Sunday, 18 March 2007, 00:44 GMT
US cool on Palestinian government
Mahmoud Abbas and Ismail Haniya
The government pairs Mr Abbas' (L) Fatah and Mr Haniya's Hamas
Washington has reacted with caution to the installation of a new Palestinian unity government.

The US said the initial policy speech by PM Ismail Haniya was disappointing and the reference to the "right to resistance" was "disturbing".

Israel flatly rejected the government but the EU said it would work with it if it recognised Israel's right to exist and renounced violence.

Palestinians hope the formation of the coalition will end a Western boycott.

The administration brings together Mr Haniya's Hamas and its rival faction, Fatah, led by Palestinian Authority President Mahmoud Abbas.

The unity government was forged after several months of fighting between the factions left more than 140 people dead.

Syrian call

The Palestinian parliament voted to approve the government on Saturday and new ministers were sworn in.

This is a great disappointment and a severe blow to peace
Sallai Meridor,
Israeli ambassador to US

In his speech, Mr Haniya said: "The government affirms that resistance in all its forms, including popular resistance to occupation, is a legitimate right of the Palestinian people.

"Our people have the right to defend themselves from continuous Israeli aggression."

But Mr Haniya also said his Cabinet would work on maintaining a truce if Israel would stop its "occupation aggression".

US State Department spokesman Sean McCormack said: "The... reference to 'right of resistance' is disturbing and contradicts directly the Quartet principle of renunciation of violence."

The principle - of the US, UN, EU and Russia Quartet - also requires the recognition of Israel and adherence to past peace deals.

Fatah gunman
Clashes between Fatah and Hamas gunmen have left scores dead

Mr McCormack said the speech was "a missed opportunity" to commit to peace.

He said the US would still work with Mr Abbas but that other contacts would be on a case-by-case basis.

A spokeswoman for Israeli PM Ehud Olmert accused the new Cabinet of endorsing the use of "terror".

Sallai Meridor, Israel's ambassador in Washington, added: "This is a great disappointment and a severe blow to peace."

But the European Union said it welcomed the formation of the government, although it remained cautious about a possible resumption of aid.

"The EU will carefully assess the platform and actions of the new government and its ministers," it said in a statement.

Syria expressed its full support for the government.

"Damascus demands the lifting of the embargo imposed on the Palestinian people," by the West, a statement in state news agency Sana read.

The embargo was imposed after the election victory in January last year of Hamas, which has rejected international calls for it to recognise Israel.

Alone among Western nations, Norway immediately recognised the new government and announced the lifting of sanctions.

Signs of the shift in US policy

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