Hamas completes formation of Palestinian cabinet

GAZA, March 18 (Reuters) - The Islamist militant group Hamas completed the formation of a Palestinian cabinet on Saturday and expects President Mahmoud Abbas to approve it even though moderate factions have refused to join.

Prime Minister-designate Ismail Haniyeh said he would present the names to Abbas on Sunday. He declined to identify any ministers but Hamas sources said party members would head key ministries, including interior, foreign affairs and finance.

The group's failure to attract any coalition partners and its decision to appoint its own members to top positions could bolster U.S. and Israeli efforts to isolate the new government diplomatically and economically.

"We have no doubt we will succeed in shouldering our responsibilities and running Palestinian affairs. The people who gave us their trust will not starve," Haniyeh told a news conference in Gaza.

"I have agreed with the president to meet him on Sunday evening to present to him the final formation of the cabinet and discuss the next steps toward presenting it to parliament."

Aides to Abbas earlier said he would not reject Hamas's cabinet choices but would press the militant group to make changes to its government agenda, which calls for resistance by any means to end Israeli occupation.

Hamas, which trounced Abbas's long-dominant Fatah faction in a Jan. 25 parliamentary election, has refused to accept interim peace deals with Israel or to commit itself to seeking a negotiated settlement as demanded by Abbas, a moderate.

Haniyeh played down the possibility of a standoff over Hamas's government programme, which some Palestinian officials have said could trigger a constitutional crisis.

Hamas is sworn to Israel's destruction and has not met the demands of Israel and the "Quartet" of Middle East mediators that it recognise the Jewish state, renounce violence and accept past agreements -- conditions for continued Western aid.

But Haniyeh urged donors not to cut off assistance that is vital to keeping the Palestinian economy afloat. "Threatening to cut aid means punishing a free people because they practised democracy in fairness and transparency," he said.

It is unclear how much of the estimated $1 billion a year the Palestinians get in foreign aid might be withheld. Hamas has vowed to replace it with aid from Iran and other Muslim states.

Donor countries are looking into the possibility of setting up a trust fund that would pay salaries directly to Palestinian Authority employees as a way to bypass a Hamas government, Western diplomats said on Friday.

CABINET NAMES EMERGE

Only the Popular Front for the Liberation of Palestine, whose leader was seized this week by Israeli forces from a West Bank prison, is still considering joining a Hamas government.

Abbas's Fatah and the other factions were under heavy U.S. pressure not to join a coalition.

Sources close to the deliberations said Hamas would name Omar Abdel-Razeq, a prominent West Bank economics professor and Hamas election official, as finance minister.

Abdel-Razeq, a professor at an-Najah University, led Hamas's election team for the West Bank. He was seized by Israeli forces early in January and freed three days ago, Hamas sources said.

Hamas sources said the group would name Mahmoud al-Zahar, a leader in Gaza whom Israel has tried to assassinate, as foreign minister, and might well keep Mazen Sonnoqrot, an independent, in his post as economy minister.

Another Hamas leader, Saeed Seyam, would become interior minister with control over three Palestinian security agencies employing thousands of men.

Hamas carried out nearly 60 suicide bombings against Israelis during the Palestinian uprising that began in 2000 but has largely adhered to a ceasefire forged a year ago.