News that the two main Palestinian factions, Fatah and Hamas, have agreed to form a national unity government and hold national elections was received with great concern in Israel.

"The Palestinian National Authority needs to choose between peace with Israel and peace with Hamas," Israeli Prime Minister Benjamin Netanyahu said in a statement. "Peace with both is impossible because Hamas aspires to destroy the State of Israel and says so openly," he said.

Analysts that spoke to Xinhua said that the agreement -- if it holds -- would not only put Israel in a new and difficult security situation, but could also cost the PNA the U.S. aid.

NEW SECURITY SITUATION

In an effort to quell Israeli fears, Palestinian National Authority (PNA) President Mahmoud Abbas on Thursday said that he would have the final word on the makeup of the government, and that his Fatah faction would continue to be in charge of peace negotiations.

Dr. Mordechai Kedar of the Begin-Sadat Center for Strategic Studies at Bar-Ilan University told Xinhua that from an Israeli perspective, prospect was dim for a Palestinian unity government.

Kedar noted that this isn't the first go round for a Palestinian unity government. In 2007, a few months after the so- called Mecca accords were signed in Saudi Arabia, Hamas took control of Gaza after it routed Fatah-loyal forces.

"This paper is no more than a fragile bridge over powerful and rumbling water," Kedar said, arguing that if national elections are held as promised, Hamas could take over the presidency as well as the parliament, resulting in security cooperation with Israel being terminated "within a minute."

Asked about the odds of the new agreement lasting, Dr. Yoram Meital, a Middle East expert at Ben-Gurion University of the Negev, was more positive.

"The (Palestinian) leadership ... decided to give the reconciliation bid a chance, mainly because of the pressure from the Palestinian society," Meital said, "which is part of the wave of uprisings in the Arab world, and a cry for change."

He added that Netanyahu's comments send a "very negative picture of how Israel views the reconciliation."