US aid decision now likely after Hamas sets Govt

Jerusalem, Mar 24: The Bush administration is expected to wait until after a Hamas-led Government is in place to make final decisions on the fate of US aid programmes, US diplomats said.

A delay of several weeks could buy the administration time to try to iron out differences with its partners in the Quartet of Middle East mediators, the European Union, Russia and the United Nations, over how to sideline the Islamic militant group without collapsing the Palestinian economy.

The delay could also give the Bush administration time to see what policies Hamas puts in place and assess how its government will be structured before announcing any decision.

Stewart Tuttle, the US Embassy spokesman, yesterday said the Bush administration's position on Hamas remained unchanged and that there was no connection between the timing of the aid review and the formation of a Hamas government.

The EU has held back from deciding the fate of its financial aid to the Palestinians, giving Hamas more time to act on calls to moderate its stance on Israel.

Hamas's government is expected to win parliamentary approval next week, but US officials said the administration's review of all aid programmes was unlikely to be completed for several more weeks, if not longer.

''The formal formation of a Hamas government is not the red line for our decisions on which aid programmes are going to go forward,'' said Tuttle.

''Our evaluation of all of our programmes is ongoing and decisions on which programmes will go forward -- and how -- will move on its own timetable,'' Tuttle added.

''It's wait-and-see,'' said a U.S. diplomatic source. ''We're not going to get out in front of the formation of a government.'' UN officials say they are concerned that a cut-off in assistance to a Hamas-led Palestinian Authority could trigger a humanitarian crisis and hobble the very institutions that would be needed to form any future Palestinian state.

In a recent report to donors, the World Bank said a sharp cut in funding from donors could push the West Bank and Gaza into a deep economic depression. Israel has already frozen tax revenue transfers in a bid to isolate Hamas.

As many as one in four Palestinians is dependent on wages from the Palestinian Authority, prompting warnings from international Middle East envoy James Wolfensohn that violence could break out if salaries are not paid.

The US delay will have little practical effect on the Palestinians since the Bush administration has already suspended its aid programmes pending the outcome of its policy review, launched after Hamas's January 25 election victory.

The Quartet has said Hamas must recognise Israel, renounce violence and accept past peace agreements or risk losing aid.

US officials said the aid review would take more time because administration officials wanted to make sure that the programmes will not violate US law, which prohibits assistance to Hamas.

Bush administration policy also bars American officials from having direct contact with members of Hamas.

Donor countries are looking at several options to avert the collapse of the Palestinian economy without providing aid to Hamas itself.

One proposal calls for setting up a trust fund that would funnel humanitarian aid to the Palestinians and pay salaries directly to 140,000 Palestinian Authority employees.

Hamas has masterminded nearly 60 suicide bombings against Israelis since a Palestinian revolt erupted in September 2000. But it has largely observed a truce declared early last year.

REUTERS