Palestinian president Mahmoud Abbas and Hamas leader Khaled Mashaal buried their differences at a Cairo ceremony Wednesday and endorsed a historic reconciliation agreement that will pave the way for elections within a year and end the bitter divide between the West Bank and Gaza, despite Israel's anger and condemnation of the accord.
The document, brokered by Egypt and signed in Cairo, was accepted by Fatah, its rival Hamas and all other factions, including the secular Popular Front, Islamic Jihad and the left-wing Palestinian People's Party.
"We announce to Palestinians that we turn forever the black page of division," said Abbas, who was speaking at the ceremony, adding that Israel must "choose between settlements and peace."
Mashaal spoke in Cairo on Tuesday night, saying the reconciliation agreement is the beginning of "a new Arab era and a new Palestinian era, putting Israel in a corner".
"It will say to the entire world that there is now an Arab-Palestinian determination that needs to be respected," he said.
The United Nations' Special Coordinator for the Middle East peace process, Robert Serry, attended the ceremony as did Turkish Foreign Minister Ahmet Davutoglu, Egyptian Foreign Minister Nabil al-Arabi and Arab League chief Amr Mussa.
The deal has been welcomed by Palestinians in the divided territories -- demonstrations in support were planned in both the Gaza Strip and the West Bank which have been ruled by rival administrations since Hamas ousted Abbas loyalists from Gaza in June 2007.
But Israel responded angrily, threatening to withhold the transfer of Palestinian tax revenues until it could be sure no money would go to Hamas.
Like the United States and the European Union, the Israeli government continues to blacklist the Hamas Islamist group as a terrorist organization.
Israeli Prime Minister Benjamin Netanyahu issued a last-minute appeal Abbas to cancel the impending unity deal, which he called a "hard blow to the peace process."
In Washington, State Department spokesman Mark Toner insisted that if Hamas wants to play a role in the political process, it needs to abide by the principles of international mediators, "which are renouncing violence and terrorism, recognizing Israel's right to exist, and abiding by previous diplomatic agreements."
But Abbas, who is expected to follow this up by paying his first visit to Gaza in four years, made it clear on Tuesday that Hamas would not have to amend its charter to recognize Israel under the reconciliation deal.
The Palestinian moves follow rallies in the West Bank and Gaza Strip in which thousands of people, inspired by the wave of popular protests that led to the toppling of Egyptian President Hosni Mubarak and Tunisian President Zine El- Abidine Ben Ali, called for an end to the division.
The reconciliation deal, which was announced last week, comes after 18 months of fruitless talks.
It provides for the formation of an interim government of political technocrats to lay the groundwork for presidential and parliamentary elections within a year.
Negotiations on the new government line-up were due to start right after Wednesday's ceremony.
De facto Gaza Prime Minister Ismail Haniyeh has declared a willingness to resign as soon as the transitional cabinet is formed, but both Hamas and Fatah reject the reappointment of current West Bank premier Salam Fayyad, who enjoys the support of the U.S. and the EU. Hamas regards him as hostile and too dependent on the U.S. to head a government representing both major factions.
Fatah, which has protested against his premiership for many months, fears his popularity.
The accord also calls for the creation of an electoral tribunal and for the release of a number of prisoners held by the rival movements in jails in the West Bank and Gaza.
Despite Wednesday's pomp ceremony, some observers say the gaps between the two groups are still large and the accord is one of principles only, citing security issues as an example.
The new government will not be involved in negotiations with Israel as these have always been handled by the Palestine Liberation Organization, headed by Abbas.
Hamas and other Palestinian militant factions in Gaza have agreed to abide by an unofficial truce with Israel, largely in place since Israel's January 2009 war in the territory. But it is unclear how long that truce will last, and Hamas has consistently rejected negotiations with Israel.
The reconciliation deal marks a diplomatic coup for Egypt's new government, 11 weeks after Mubarak was toppled in a popular revolt.
Cairo had tried for more than a year to mediate between Fatah and Hamas but its efforts fell flat.