Sources close to PA Chairman Mahmoud Abbas have said that Abbas received word from the US State Department that it will shun the new Hamas-Fatah unity coalition for its failure to explicitly recognize Israel. PA Prime Minister Ismael Haniyeh was expected to tender his resignation on Thursday evening, only to be reappointed by Abbas with a mandate to form a new coalition of the two rival parties.

Israeli Prime Minster Ehud Olmert also expressed disappointment with the Hamas-Fatah agreement, but stated a willingness to continue a dialogue with Abbas. The US will maintain ties with Abbas as well. The PA is currently under severe economic sanctions for its failure to recognize Israel, abide by earlier agreements, and renounce terrorism.