Future of aid: The United States will have no contacts with Hamas unless it backs peace with Israel, US president George Bush said yesterday.
Mr Bush also urged president Mahmoud Abbas, whose cabinet resigned after his Fatah party lost to the anti-Israel group, to stay in office so that the US could keep open a diplomatic channel with the Palestinian government.
"I have made it very clear, however, that a political party that articulates the destruction of Israel as part of a platform is a party with which we will not deal," Mr Bush told a White House news conference.
Secretary of State Condoleezza Rice called Mr Abbas to ask him to stay on and said she was speaking to her counterparts in a group of major international powers to craft a joint response.
Both Europe and the US yesterday called on Hamas to renounce violence and recognise Israel's right to exist, but officials said there could soon be transatlantic divergence.
European diplomats indicated the EU could maintain its role as the Palestinian Authority's single biggest donor if Hamas desisted from acts of violence, while the US struck a tougher line.
"The aid is not there to help the Palestinian government, it's there to help the Palestinian people," said a French diplomat of the EU's annual aid of €500 million to the Palestinians.
Questions about the EU's continuing funding had been raised in the run-up to the election.
"Of course, we recognise the mandate for Hamas, because the people have spoken in a particular way in the Palestinian Authority," said British prime minister Tony Blair.
"But I think it is also important for Hamas to understand that there comes a point where they have to decide between a path of democracy or a path of violence."
The Hamas election victory is a blow to the ideologues in the Bush administration who believed that militant Islamists would be "marginalised" through the democratic process.
But Dr Condoleezza Rice and others still cling to the hope that Hamas and Lebanon's Hizbullah will become "transformed" into taking more pragmatic positions when in government.
Mr Bush only permitted direct aid to the Palestinian Authority in 2003 in a show of support for president Mahmoud Abbas, who was then prime minister. The initial sum was $20 million (€16.4 million) but Congress then tried to attach conditions, including the dissolution of terrorist groups.
Last year, Congress "earmarked" $150 million in Palestinian aid to be channelled through US aid agencies, NGOs and philanthropic organisations, as well as $50 million for Israel to build crossing points into Palestinian territory. US officials would not be drawn on whether the US would cut aid to a Palestinian government headed by Hamas - a group it lists as a terrorist organisation - or included its members.
But they noted the bulk of US aid had been channelled through third parties, such as the UN and non-governmental organisations. - (Financial Times service, with additional reporting by Reuters)