- The Washington Times - Monday, February 27, 2006

From combined dispatches

BRUSSELS — The European Union threw the Palestinians a short-term aid lifeline yesterday to help stave off imminent financial collapse, despite the appointment of a leader of the Islamist militant group Hamas as prime minister.

But the 25-nation bloc made sure most of the $142 million would bypass the Palestinian Authority, sharpening pressure on Hamas to moderate its radical policies when it takes over government responsibility.

“Today I have announced a very substantial package of assistance to meet basic needs,” European External Relations Commissioner Benita Ferrero-Waldner said after EU foreign ministers discussed how to respond to the impending formation of a government by Hamas, which does not recognize Israel’s right to exist and espouses armed struggle.

The State Department welcomed the European Union’s decision.

“It is a sign that we are all working together,” spokesman Adam Ereli said in Washington. “We are all working together to prevent a collapse of the interim [Palestinian Authority] government and to support the Palestinian people.”

Secretary of State Condoleezza Rice talked with senior EU officials Sunday, he said.

The EU package included $47.4 million to pay energy bills and $75.8 million channeled through the U.N. Relief and Works Agency for Palestinian refugees (UNRWA). About $20.7 million will go to the Palestinian Authority to help pay salaries.

“In effect, we will pay electricity bills for them, direct to the utilities concerned, including in Israel,” she said.

Major powers are debating how to react to Hamas’ election victory.

International envoy James Wolfensohn warned in a letter to the Quartet of Middle East peace mediators that without emergency funds, the Palestinian Authority faced financial collapse within two weeks now that Israel has cut off tax transfers.

He said that even if the Palestinian Authority survived with emergency funding, the financial crisis could bring “violence and chaos” unless the Quartet — the United States, the European Union, Russia and the United Nations — developed a long-term funding plan once a Hamas-led government is in place.

The EU is the largest donor to the Palestinians, but its funding has been thrown into doubt by the ascendancy of Hamas, listed as a terrorist group by the United States and the European Union.

Hamas has named Ismail Haniyeh as prime minister-designate.

French Foreign Minister Philippe Douste-Blazy said continued support to the Palestinians is vital.

“There would be nothing worse than not making our contribution,” he told reporters. “There would be social, economic, and … security chaos. We must encourage Hamas to evolve.”

His German counterpart, Frank-Walter Steinmeier, said any further aid will depend on Hamas’ renouncing violence, recognizing Israel and adhering to deals already reached between the Palestinians and Israel.

Israel has stopped monthly transfers of $50 million to $55 million in tax payments to the Palestinians, and the United States has demanded the return of $50 million in aid to prevent it from falling into Hamas’ hands.

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