Resignation a 'setback for peace'
JERUSALEM (CNN) -- World leaders are calling the resignation of Palestinian Prime Minister Mahmoud Abbas a major setback for a potential Mideast peace plan.
Abbas submitted his resignation and that of his government to Palestinian Authority President Yasser Arafat, who later told Palestinian legislators in Ramallah that Abbas and his Cabinet will be operating as a caretaker government.
But Washington says it remains committed to the tatty road map to peace and though the resignation would not deter peace efforts, it would delay them.
"The creation of the office of prime minister was a key turning point for the Palestinian Authority in the development of new institutions to serve all the people, not just a corrupt few tainted by terror," White House spokesman Scott McClellan said.
"The prime minister must be supported by a Cabinet committed to fighting terror, political reform, and rooting out corruption."
In other developments in the region, Israel wounded the founder of Hamas in a missile strike on Saturday.
In Gaza City, Palestinian witnesses said that the Hamas founder and spiritual leader Sheikh Ahmed Yassin was lightly wounded in an Israeli F-16 missile strike. (Full story)
The strike is likely to add more wear and tear to the already beat-up peace map.
The U.S. and other countries had thrown their weight behind Abbas, and viewed his appointment less than four months ago as Palestinian prime minister as the best hope for peace with Israel.
Infighting, strikes blamed
European Union leaders meeting in Italy blamed Palestinian infighting and Israeli strikes for the crisis.
British Foreign Secretary Jack Straw called Abbas' resignation a serious development.
It did not "put the peace process back to square one, but it is a further difficulty, a huge tragedy that the Palestinians should be so divided," Straw said.
EU spokeswoman Emma Udwin said Abbas' move could have "serious repercussions" for peace. (EU leaders alarmed)
Arab League Secretary General Amr Moussa blamed Israel for the worsening situation.
"Yes, it's a step back, but the Israelis have stepped back several times already," Moussa said.
"There's nothing called the road map that is being implemented. It is there on paper, but it is not being implemented."
In Egypt, Foreign Minister Ahmed Maher said his government would work to try and "help the Palestinian leadership end its crisis." Egypt has been a key moderator in the conflict.
Jordanian Foreign Minister Marwan Muasher called on the Palestinian leadership to "overcome its differences during these historic times and critical circumstances ... (otherwise it) will give the Israeli government the pretext to disavow its commitments enlisted in the road map."
Abbas had offered hope for a U.S.-backed step-by-step peace plan, or the Mideast road map, but said all along that he did not want to be a figurehead prime minister. (Profile)
During his four months in office, he has been in a power struggle with Arafat, particularly over control of Palestinian security forces to rein in militants conducting terror attacks against Israeli civilians.
In a statement, Abbas told the Palestinian Legislative Council his reasons for stepping down.
The fundamental problem, the statement said, was "Israel's unwillingness to implement its road map commitments and to undertake any constructive measures."
He also said the United States and the international community "did not exert sufficient influence on Israel to implement its commitments in the road map to push the peace process forward or to end its military escalation."
Meanwhile, European Union foreign ministers also denounced the political wing of Hamas as a terrorist organization after the group's claim of responsibility for the bus bombing -- a decision long sought by both Israel and the United States.
Saturday's decision opens the way for Europe to freeze the group's assets and place its leaders on a terrorist blacklist. (Full story)