Rival Palestinian factions Hamas and Fatah agreed Wednesday to form a unity government and hold new elections a potentially historic step toward mending the rift that has split their people between two sets of rulers for seven years.

Following the announcement of the deal, hundreds of people took to the streets in Gaza to celebrate. Crowds hoisted Palestinian flags and posters.

“I hope it will be real this time,” said Asma Radwan, a 33—year—old schoolteacher who came with her two young sons. “I came to say ‘thank you’ to the leaders. But don’t disappoint us like the past. Seven years of division is enough.”

It remained unclear how the plan would succeed where past attempts have repeatedly failed. It also added new complications to U.S. efforts to broker a peace deal between Israel and the Palestinians. Both the U.S. and Israel condemned the agreement.

In an initial response, the office of Israeli Prime Minister Benjamin Netanyahu cancelled a planned meeting for Wednesday evening between Israeli and Palestinian peace negotiators.

Israel and the West consider Hamas a terrorist group. Hamas, which is sworn to Israel’s destruction, has killed hundreds of Israelis in bombings and shootings over the past two decades.

Abbas “needs to choose between peace with Israel and an agreement with Hamas, a murderous terror organization that calls for the destruction of Israel,” Mr Netanyahu said.

In a statement, Mr Abbas said “there is no contradiction” between reconciliation and his efforts to reach a “just peace” with Israel. He said Wednesday’s deal would help Palestinian negotiators achieve a two-state solution.

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