Hamas will only agree to hold presidential and parliamentary elections next May if voting takes place in East Jerusalem and Hamas is allowed to participate, Haaretz has learned - a condition to which Israel will almost certainly object.

This puts Hamas and Fatah's agreement to hold elections in the West Bank and Gaza in a different light. A senior Palestinian source told Haaretz that Hamas had set the condition in an effort to torpedo the elections and thus avoid the risk of being forced out of power in the Gaza Strip. Hamas, however, is expected to blame Israel for blocking the democratic process, so that international pressure to allow them to run will be brought to bear, as it was before the parliamentary elections in January 2006. The Palestinian Authority is also expected to press for Hamas participation to embarrass the Israeli government.

The agreement to hold the election was reached two weeks ago in Cairo by Hamas political bureau chief Khaled Meshal and PA President Mahmoud Abbas in a meeting held as part of the two factions' reconciliation efforts.

Israel is expected to object to any Hamas activity in the eastern part of the capital. The Israeli government will also be subject to public pressure to reject Hamas' participation in elections altogether, after Hamas won the 2006 elections by a large majority and also came out ahead in the regional elections in East Jerusalem.

Both Hamas and the PA are aware there is only a slim chance that an Israeli government headed by Prime Minister Benjamin Netanyahu will allow Hamas to run, which is why many participating in the reconciliation talks don't believe the elections will take place.

A senior Israeli source said that the government isn't likely to allow voting in East Jerusalem if Hamas participates, but added that it would be difficult to prevent Hamas' participation in West Bank voting, let alone in Gaza.

As part of its reconciliation demands, Hamas also wants Egypt to open an embassy in the Gaza Strip, where it has had no official presence since the Hamas takeover of the Strip in 2007.

In less than two weeks, representatives of all the Palestinian groups will meet in Cairo for several days of talks, at the end of which the leaders will meet to set a date for elections. It isn't yet clear whether a new transitional government, headed by someone agreeable to both Hamas and Fatah, will be established.