UNITED NATIONS, April 24 (Xinhua) -- With donors balking at funding the Hamas-led Palestinian government, tension between that administration and President Mahmoud Abbas' Fatah movement, and continued settlement expansion by Israel, the situation in the Middle East has reached a volatile juncture, a United Nations official said Monday.

    "We are witnessing a potentially dangerous deterioration of the situation in the Israeli-Palestinian conflict," Alvaro de Soto, the UN special coordinator for the Middle East peace process, told the Security Council in the monthly briefing on the issue.

    De Soto said that the funding crisis was a result the failure of the new Palestinian government to commit to the principles of non-violence, recognition of Israel's right to exist and acceptance of previous commitments and obligations.

    He said lawlessness had already become endemic in Palestinian areas, and is "worsening amid uncertainties concerning command and control of the security forces within the new dispensation."

    There are signs of a struggle between the presidency and the new Palestinian government, with President Abbas canceling the Hamas appointment of a wanted militant to a senior position, he said.

    At the same time, he pointed to an alarming increase in violence since March 30, with 29 Palestinians and 10 Israelis killed. The Israeli fatalities, along with the deaths of three internationals, resulted from two suicide bombings that, although condemned by President Abbas, were called legitimate resistance or a natural consequence of the Israeli occupation by Palestinian Cabinet ministers.

    Israel has continued to "create facts on the ground" including settlement expansion and a route of the separation barrier which deviates from the 1967 borders. The envoy warned that this raises "serious concerns" as to the possibility of achieving a viable and contiguous Palestinian State.

    Annan has invited the principals of the Middle East diplomatic quartet -- the United States, the European Union and Russia in addition to the UN -- to New York on May 9, to discuss the "new realities" of the long-running conflict, he said. Enditem