MECCA, Saudi Arabia (Agencies) – Rival Palestinian factions signed a power-sharing accord aimed at ending months of bloodshed and agreeing that the Islamic militant group Hamas would head a new coalition government that would “respect” past peace agreements with Israel. However, Israel and the U.S. have demanded the new government explicitly renounce violence, recognize Israel and agree to uphold past peace accords.

U.S. and Israeli acceptance is crucial to the deal’s success. Unless they are convinced Hamas has sufficiently moderated, the West is unlikely to lift a crippling financial blockade of the Palestinian government, and it will be difficult to advance the peace process.

Palestinians also expressed doubt that economic boycott would end.

In Washington, U.S. State Department deputy spokesman Tom Casey said “we’ll see what any final agreement actually looks like and we’ll have to make an evaluation from there” as to whether it meets international demands. “In terms of what the outcome of those discussions look like and whether they meet the Quartet principles, I think we’ll just have to see.”

Shortly after Hamas won elections in January 2006, the so-called Quartet of Middle East peace mediators, the U.S., the U.N., the European Union and Russia, said future aid to a new Palestinian government led by the militant group “would be reviewed by donors against that government’s commitment to renounce violence” and recognize Israel and other agreements.

Israeli government spokeswoman Miri Eisin would not say whether Israel believes the guidelines of the new government fulfill those demands.

“Israel expects a new Palestinian government to respect and accept all three of the international community principles,” Eisin told The Associated Press after the accord was announced.

At stake is roughly $1 billion (¤770 million) a year in frozen aid from foreign donors in addition to approximately $500 million (¤384 million) in withheld tax revenues collected by Israel on behalf of the Palestinians.

U.N. Secretary-General Ban Ki-moon welcomed the announcement of the Palestinian unity government and said “he hopes that this agreement will curb the violence, creating a better future for the Palestinian people,” U.N. spokeswoman Michele Montas said at U.N. headquarters in New York.

Palestinians also hope the agreement will avert an outright civil war. Clashes between Hamas and Fatah gunmen have killed 130 Palestinians since May, and cease-fires have repeatedly broken down. The latest fragile truce came Sunday, after four days of fighting killed 30 people.

Palestinian President Mahmoud Abbas, of Fatah, and Hamas leader Khaled Meshaal headed two days of intense negotiations in a Mecca palace overlooking the Kaaba, Islam’s holiest shrine, a venue Saudi Arabia chose to step up the pressure on the two sides to compromise.

Much of the negotiations centered on a single word. Abbas pressed Hamas to accept the stronger stance of “committing to” past peace accords with Israel signed by the Fatah-dominated Palestinian Liberation Organization. But in the end, he was forced to settle for the promise to “respect” them.

The final agreement was announced at a ceremony aired live on Arab television Thursday night, in which Saudi King Abdullah sat with Abbas on his right and Hamas leader Meshaal on his left.

Abbas aide Nabil Amr read a letter from Abbas proclaiming the accord and asking Haniyeh of Hamas to form the new coalition government within five weeks, divvying up Cabinet posts between the factions according to a formula agreed on in the Mecca talks.

Abbas and Meshaal insisted the agreement would bring peace between their factions and lavished praise on the Saudi monarch for his help, even comparing him to the Prophet Muhammad in his ability to bring reconciliation. The Palestinian president said the deal would “satisfy our people … and bring us to the shores of peace … This initiative has been crowned with success.”

Meshaal vowed the accord would put an end to violence after a series of truces between Fatah and Hamas gunmen that collapsed. “I tell those who fear that the fate of this agreement will be the same fate of the old ones, … we have pledged our allegiance to God from this sacred place …. and we will go back to our country fully committed to it.” “I say to our young people that this is an agreement of the leadership of the biggest groups and none of you should accept any order from others to fire,” he said. Before the accord was announced, Hamas and Fatah delegates said the two sides had reached an agreement in principle. But at the ceremony, Abbas aide Amr called it the “final agreement.”

In Gaza City, celebratory gunfire was heard for more than an hour after the accord was announced. Residents expressed hope it would mean an end to the violence and the financial boycott, imposed by the West after Hamas came to power.

Saudi Arabia promised $1 billion (¤770 million) in aid to the Palestinians, according to Ahmed Youssef, a political adviser to Prime Minister Ismail Haniyeh of Hamas. The kingdom will likely now face the task of selling the agreement to its ally, the United States.

A first test of international acceptance of the deal could come on Feb. 19, when Israeli Prime Minister Ehud Olmert, Abbas and Secretary of State Condoleezza Rice are due to meet in Jerusalem for talks intended to revive peace negotiations.

If the West does not back the new government and refuses to lift the economic boycott, it could put a strain on the fragile peace between Hamas and Fatah.

Abbas’ aide, Amr, said Saturday that Fatah did not have “high expectations” that the financial blockade would be lifted. “When we decided to form the (national unity) government, we didn’t have such exceptions. But it was imperative to reach an agreement to end the (internal) conflict,” Amr said.

The deal could also fall apart over the formation of the government, particularly over the issue of who will fill the vital post of interior minister, which would control the security forces. Under the agreement, the post will go to an independent, because Hamas and Fatah were each reluctant to see the other faction hold the ministry.

Hamas must propose the candidate for approval by Abbas, but both sides on Saturday downplayed the potential difficulty in naming the posts. “We have overcome the big issues and now there are just small issues,” said Hamas government spokesman Ghazi Hamad. Under the agreement, Hamas will get nine Cabinet posts, including the prime minister position. Fatah gets six, and other factions get four. Besides the interior ministry, independents will get the foreign ministry and planning ministry.