CAIRO/GAZA,(Reuters) – The militant Islamist group Hamas warned Israel on Saturday of a third uprising if it failed with the United States and Europe to make progress towards a Palestinian state based on 1967 borders.

Hamas leader Khaled Meshaal told a news conference in Cairo Western powers would have six months to seize on “the historic chance” to settle the region’s longest conflict once a national unity cabinet is formed between Hamas and rival group Fatah.

But forming the government is subject to talks between the two groups and faces several obstacles, including obtaining guarantees to ensure the end of a Western financial ban on the Palestinian Authority once the cabinet takes power.

Shortly before Meshaal’s ultimatum, Palestinian militants fired rockets into Israel, residents said. Israeli artillery shells later hit a house and a car in the northern Gaza Strip, wounding at least two people, hospital officials said.

Israeli forces also killed a Palestinian militant in the strip on Saturday, and in a separate incident overnight, they shot dead an unidentified Palestinian while he was approaching the strategic Karni border crossing.

“We give them six months and the real political horizon will open up,” said Meshaal, in Cairo to discuss efforts to form the unity government and a possible prisoner exchange with Israel.

f progress is not made, Meshaal said, the Palestinian Authority could collapse and “the Palestinian people will close all the political ledgers and come out in a third intifada (uprising) project and the struggle will be wide open.”

Palestinians began an uprising in 2000 in which they carried out frequent attacks inside Israel. There has been a sharp reduction in such strikes in the Jewish state since a ceasefire was declared in early 2005.

Meshaal gave few details of his negotiations in Cairo on a unity government, seen by Palestinians as a way to end the financial sanctions imposed after Hamas won the Palestinian parliamentary elections in January.

One issue delaying the agreement with Fatah, he said, was his group’s rejection to the idea of a cabinet of technocrats based on competence regardless of their party or factional affiliations — an idea meant to keep Hamas at a distance from the levers of power.

Meshaal also made clear Hamas would not give up its control of the Palestinian Interior Ministry, which oversees major Palestinian security services.

Hamas’s insistence on controlling the Interior Ministry has bogged down negotiations between Palestinian President Mahmoud Abbas of Fatah and Prime Minister Ismail Haniyeh of Hamas.

“(Hamas is) the ruling party… Some people want us to give up the tools of power. This is injustice,” Meshaal said.

Senior Palestinian officials said Abbas had planned to announce on Saturday he was naming a U.S.-trained academic, Mohammad Shbair, to replace Haniyeh as prime minister. But Haniyeh has refused to step aside until a final agreement on a unity government is reached.

Meshaal said there was progress in negotiations, mediated by Egypt, to swap hundreds of Palestinian prisoners with an Israeli soldier, Gilad Shalit, who was captured in a cross-border operation by Palestinian militants, including members of Hamas, in June. He blamed Israel for the delay but gave no details.

Israel began an offensive in the Gaza Strip after Shalit’s capture. An estimated 402 Palestinians, about half of them militants, have been killed since the Gaza offensive began, say Palestinian hospital officials.

Asked is Shalit was in a good health, Meshaal grinned, telling a reporter: “He is good and he sends his regards.”