(Recasts with statement, adds fresh quotes) By Alaa Shahine and Nidal al-Mughrabi CAIRO/GAZA, Feb 25 (Reuters) - Palestinian groups Fatah and Hamas exchanged promises on Wednesday to free each other's detainees in Gaza and the West Bank, in a goodwill gesture on the eve of national unity talks. The national dialogue, expected to start on Thursday in Cairo with about a dozen Palestinian groups, seeks to establish a unity government which could take part in peace talks with Israel and oversee reconstruction work in Gaza after a three-week Israeli offensive there in December and January. Fatah and Hamas agreed to form two committees to "work on closing the file of the detainees within a time that does not exceed the end of the national dialogue", a statement issued after talks between the two groups in Cairo said. They did not set a timeframe for the end of the dialogue. Fatah official Azzam al-Ahmed said Hamas, the Islamist group which won a parliamentary election in 2006, has lifted a house arrest imposed on several Fatah leaders in the Gaza Strip. Hamas leader Mahmoud al-Zahar, on the other hand, said Fatah had so far released 80 out of around 400 Hamas detainees in the Israeli-occupied West Bank. Fatah delegates in Cairo were in touch with their leader, Palestinian President Mahmoud Abbas, to free more, he added. Rivalry between the two groups worsened in 2007 when Hamas forces drove Fatah out of Gaza in a power struggle that turned violent. NATIONAL UNITY GOVERNMENT The two big groups have fundamental differences over how to deal with Israel. Hamas reserves the right to fight Israel, although it is prepared to accept an 18-month truce, while Fatah has renounced violence and puts all its hope in negotiations. Relations were especially bitter in December and January during Israel's assault on Gaza. Some 1,300 Palestinians were killed in the operation, including about 700 civilians. The meeting on Wednesday was the latest of several in the last few weeks to pave the way for the national dialogue. The Palestinian groups aim to set up a government of national unity, probably of non-partisan technocrats, to deal with foreign governments, coordinate reconstruction in Gaza and prepare for Palestinian presidential and legislative elections. An Arab diplomat said the Egyptian mediators hoped to complete an agreement in time for endorsement by an Arab summit scheduled for Qatar in late March. But analysts say it will be difficult to reconcile the need to include Hamas's points of view in the new cabinet with U.S. and Israeli demands that it meet their conditions for dialogue. The United States and European Union countries refuse to deal with Hamas unless it renounces violence, recognises Israel's right to exist and accepts previous agreements between Israel and the Palestinian Authority, which is run by Fatah. One of the most difficult tasks in the dialogue will be rebuilding the Palestinian security forces, which for the past 18 months have been divided between Hamas-controlled forces in Gaza and Fatah-controlled forces in the West Bank. Hani Habib, a political analyst in Gaza, said it would be difficult to resolve the core problems. He said the main motive for forming a unity cabinet was the desire to facilitate reconstruction in the coastal enclave. "The parties ... may know the chances of success are dim but they want to show there is movement. Experience has taught us not to hold out much hope as long as the political will continues to be missing," he said. (Additional reporting by Jonathan Wright, editing by Alison Williams)
British Foreign Secretary David Miliband talks during an interview with Reuters in Cairo February 25, 2009. Miliband said on Wednesday that talking to the Palestinian Islamist movement Hamas was "the right ...
