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Palestine's Hamas and Fatah parties have failed to come to an agreement that would form a unity government.
The main sticking point is how to deal with pre-existing truce agreements with Israel, with Fatah largely supporting agreements signed by the PLO, and Hamas opposing.
President Mahmoud Abbas's Fatah movement has insisted during Egyptian-hosted talks taking place in Cairo that rival Islamist group Hamas must "abide" by existing peace agreements signed with Israel but Hamas has refused to make such a commitment.
Hamas proposed using the word "respect" instead of "abide" but this falls short of satisfying the United States, Israel and the West, who want the Islamist group to endorse peaceful settlements with Israel.
Internal political considerations add more problems to the mix. Hamas' political platform differs greatly from the Palestinian Liberation Organization's (PLO's) and Palestinian Authority's embrace of a two-state solution with an Israeli withdrawal to the 1967 borders. Instead, Hamas has suggested a long-term truce with Israel with no formal recognition.
"It remained a point of disagreement," said Fatah's delegate to the talks, Ashraf Goma.
Abbas, talking to reporters in the West Bank town of Ramallah, admitted that negotiations "had encountered difficulties".
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