Palestinian President swears in emergency government

The 13-member cabinet, including an ex-guerrilla chief as interior minister, replaces a short-lived unity government Abbas dismissed after Hamas seized control of the Gaza strip in a surge of factional fighting last week.

"Security of the citizen is the priority on the basis of the sovereignty of the law," the newly appointed Prime Minister Salam Fayyad told Palestinians in a televised address.

Aides of President Abbas said he had issued decrees bypassing constitutional limits on his powers to establish the emergency government and keep it in place without the approval of the Palestinian parliament, which has a Hamas majority.

Abbas also issued bans on Hamas's armed institutions, while Fayyad froze government accounts to prevent Hamas's dismissed ministers from gaining access to funds - though Washington had already taken similar steps on international accounts.

Hamas, which convincingly defeated Abbas's Fatah to win Palestinian elections last year, denounced the new cabinet as a "coup" mechanism.

The deposed Hamas Prime Minister Ismail Haniyeh insisted the Hamas-Fatah coalition was the 'rightful government.'

Flexing his executive muscle, Abbas named retired guerrilla chief and Fatah ally Abdel-Razak Yahya as interior minister - a post overseeing all Palestinian security forces.

"He's tough," a Palestinian official said of Yahya. "He believes security forces should not be involved in politics."

The U.S. consul-general who handles relations with the Palestinians said Washington would lift a ban on direct financial aid to the new emergency government, clearing the way for the European Union and Israel to follow suit.

Western powers imposed an aid embargo after Hamas came to power in March 2006 because it failed to recognise Israel, renounce violence and accept interim peace deals. Hamas secured alternative support from Israel's arch-foe Iran.

Gaza effectively a Hamas fiefdom

Yahya cannot be expected to wield much clout in Gaza, now effectively a Hamas fiefdom. But his appointment could stave off infighting in the occupied West Bank, where Fatah holds sway and where Hamas has threatened reprisals for round-ups of its men.

But Hamas has also made conciliatory overtures, saying it did not seek its own state in Gaza, where 1.5 million people are crowded along 25 miles of coast. Hamas still refers to Abbas as president though he fired the faction from government.

Israeli Prime Minister Ehud Olmert, en route to the United States for consultations with President George W. Bush, welcomed Abbas's plan to form a new government under Western-trained economist Salam Fayyad as a breakthrough for peace efforts.

"(The current situation) presents an opportunity that has not existed for a long time," Olmert said on Saturday.

Hamas said it would not recognise the emergency cabinet. "Fayyad's government is not a national government and is not legitimate. It will not win legitimacy or recognition, except from the occupation (Israel) and the Americans," Sami Abu Zuhri, a Hamas official said.

Gaza and the much larger West Bank are only about 45 km (30 miles) apart, with Israel in between, but they now appear poised to function as two separate territories.

Putting new pressure on Hamas, a top Israeli energy company, Dor Alon, said it was suspending fuel supplies for private use in Gaza, though the tap remained open for power stations.

"We should simply increase the isolation of Gaza," Infrastructure Minister Binyamin Ben-Eliezer told Israel's Army Radio. "I want to stop everything until we understand what is going on there."

Fayyad serves as Palestinian prime minister, replacing Ismail Haniyeh of Hamas. He also holds the finance and foreign affairs portfolios.