US/MIDDLE EAST: The US last night softened its position on providing aid to the Hamas-controlled Palestinian Authority in the face of a looming catastrophe that threatens to leave thousands of people in Gaza and the West Bank short of cash, food, medicines and petrol.
Washington signalled that, while not prepared to deal with Hamas itself, it was content to let the EU, which has been the biggest donor to the Palestinians, bail out the authority to prevent it from collapsing into chaos.
At a meeting at the UN headquarters in New York, the Europeans and Russians pressed the US to take a softer approach towards funding. Both the US and the EU cut aid after the election of Hamas in January, saying they would not deal with terrorists,
The meeting coincided with the publication of a World Bank report warning that the financial crisis gripping the Palestinian Authority was deeper than first thought and could leave the West Bank and Gaza ungovernable.
Failure to pay the salaries of the authority's 165,000 workers, it warned, could lead to an infrastructural collapse that would be hard to reverse.
Mahmoud Abbas, the Palestinian president, appealed to the Quartet Group (the UN, US, EU and Russia) to provide funds to pay salaries. He said: "A quarter of the Palestinians rely on the public sector salaries, and failure to pay these salaries could jeopardise the very foundation of the institutions of the Palestinian Authority and the future Palestinian state."
Benita Ferrero-Waldner, the European Union external affairs commissioner, said the Europeans were proposing an international mechanism by which aid would reach the Palestinian people but not go directly through Hamas.
Asked whether she thought the Bush administration would agree to such a proposal, she said: "We will have to see."
The French government proposed, through the EU delegation, that the World Bank should channel funds to the Palestinian Authority to pay the salaries. Another option being floated was to give money directly to the office of Mr Abbas, whose Fatah party is not designated by the US as a terrorist organisation.
Sean McCormack, the US state department spokesman, said: "The principle for us remains the same. We want to address the humanitarian needs of the Palestinian people, but we are not going to provide money to a terrorist organisation."
The US said yesterday that some of the $30m could be given back to the Palestinians as part of a modest package of medical aid rather than going direct to the Hamas-led government.
Condoleezza Rice, the US secretary of state, said: "We'll be talking about a plan to provide substantial, new in-kind, rapid intervention into the healthcare situation so that Palestinians can have healthcare."
British foreign secretary Margaret Beckett said the meeting should bring a balance between not giving support to terrorists and easing the extremely difficult situation of the Palestinians.