The choice facing Palestinian President Mahmoud Abbas is stark: sack the Hamas-led government and risk civil war or do nothing and watch poverty and unrest deepen in Gaza and the occupied West Bank.

Against a backdrop of the bloodiest internal violence in more than a decade, that is the dilemma confronting the moderate Abbas ahead of a meeting with U.S. Secretary of State Condoleezza Rice in the West Bank city of Ramallah on Wednesday.

Rice will want to explore reviving peace talks with Israel.

But no breakthrough is likely with Palestinian politics in disarray, factional violence erupting on the streets and Israeli Prime Minister Ehud Olmert badly weakened by the war in Lebanon.

Twelve Palestinians have been killed and more than 100 wounded in fighting between Abbas's Fatah faction and the rival Hamas militant movement since Sunday.

The clashes followed the failure of talks between Fatah and Hamas to form a unity government that Palestinians had hoped would lift a U.S.-led aid embargo aimed at forcing Hamas to recognize Israel's right to exist and renounce violence.

At the same time, government workers have been on strike for a month over Hamas's inability to pay full wages since taking office in March, a protest Hamas accuses Fatah of orchestrating.

Meanwhile, Israel has ruled out goodwill gestures to Abbas, such as freeing Palestinian prisoners, before a soldier held captive by militants in Gaza is released.

All the doors have been shut in his face. There's complete paralysis and he is incapable of making a single move to implement his policies, Azzam al-Ahmad, head of the Fatah parliamentary bloc, told Reuters.

I believe he has one last chance to prove he is qualified to lead the Palestinian people or it will be his political end and the collapse of the entire Palestinian national work.

If Abbas seeks to break the aid embargo by sacking the government and appointing a cabinet of technocrats, the consequences could be civil war, Palestinians officials say.

But if Abbas allows the government to remain or fails to convince Hamas to accede to a unity coalition that recognizes Israel, there is virtually no chance of lifting sanctions.

Hamas trounced the long-dominant Fatah in parliamentary polls in January, setting in motion the current power struggle.

RICE TALKS

Abbas is unlikely to offer Rice much when she makes the latest stop on a regional tour.

He will discuss with Rice a six-point document of new demands he wants his Hamas government to accept to end the crisis, said one senior Palestinian official. Otherwise, he will take action by either sacking it or calling for new presidential and parliamentary elections.

But other officials and aides noted the reluctance of Abbas to act against Hamas in recent months despite similar threats.

They said Abbas lacked the charisma and strength of his predecessor Yasser Arafat, and had lost control over Fatah while failing to make the Hamas government accept his peace policies.

Elected overwhelmingly on a peace platform in early 2005, Abbas has traditionally been a non-confrontational figure. He has sought to moderate rather than confront Hamas, which advocates Israel's destruction.

Hamas leaders accuse Fatah of trying to topple their government and suggest Abbas is only serving the interests of Israel's U.S. ally.

President Abu Mazen is stoking the fire, Hamas lawmaker Yahya Moussa told Reuters, referring to Abbas by his nickname.

Why is there an armed coup d'etat against the people's democratic choice? Is this what he wants to offer Condoleezza Rice. Is this what pleases President Bush?

Palestinian officials said Abbas felt Hamas had let him down over the unity government agreement announced last month.

While he interpreted it as meaning the planned coalition had to honor past peace deals with Israel, thus recognizing the Jewish state, Hamas made clear from the start it had no intention of doing so.

In a letter in the al-Ayyam daily on Tuesday, political analyst Ali Jarbawi appealed to Abbas, Prime Minister Ismail Haniyeh as well as Fatah and Hamas leaders to work together.

He said Palestinians were being dragged to the abyss.

Like all other Palestinians I ask you: What are you waiting for to end this conflict ... Are you aware that the people are suffering? Jarbawi wrote.

Israel