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Written by: Staff

GAZA, Apr 7 (Reuters) Palestinian militant group Hamas today condemned a decision by the European Union to freeze aid to its newly formed government and said the move would only make Hamas more popular.

''They are punishing the Palestinian people for practising their (democratic) choice,'' Prime Minister Ismail Haniyeh, a senior Hamas leader, told Reuters, referring to Hamas's sweeping victory in parliamentary elections in January.

''This is a continuation of hasty decisions ... that will increase the suffering of the Palestinian people and provide a cover for the Israeli occupation.'' The remarks were among the strongest Haniyeh has made against the EU, which regards Hamas as a terrorist group. He has previously urged European countries to sit down for dialogue.

The EU Commission said it had halted payments to the government because the new cabinet had not recognised Israel's right to exist or renounced violence. Hamas' charter officially calls for Israel's destruction.

''For the time being, there are no payments to or through the Palestinian Authority,'' Emma Udwin, a spokeswoman for the Commission, the EU's executive arm, said today.

She told a news briefing the Commission was adopting a ''policy of maximum prudence'' which did not prejudge decisions by foreign ministers of the bloc when they meet on Monday.

Palestinian Foreign Minister Mahmoud al-Zahar, a senior Hamas leader with a reputation as a hardliner, said he would write to EU foreign ministers as early as tomorrow.

''I am afraid it may wreck the credibility of the European Union in the Arab and Islamic world ... The conditions made in return for the aid were unjust,'' Zahar told Reuters.

Haniyeh, whose cabinet took office last week, said the EU's move would backfire.

''This decision will strengthen the Palestinian people's support for the government because they will feel the government is being targeted because it wanted to protect their rights,'' he said.

In an effort to try to talk EU and other Western nations around, Haniyeh said he would send some of his ministers abroad, although he gave no timeframe.

Besides the EU, the United States has ordered its diplomats and contractors to cut off contacts with Palestinian ministries.

EU diplomats said the aid freeze covered all direct aid to the Palestinian government and payment of public employees' salaries with EU funds through the World Bank, but not humanitarian aid through international and non-government organisations.

Zahar said he hoped the 25-nation EU might adjust its position at Monday's foreign ministers' meeting in Luxembourg.

The Hamas-led government is facing a cash crunch partly because of Israel's decision to halt the monthly transfer of tax revenues it collects on behalf of the Palestinian Authority.

The shortage of funds has forced the new government to delay paying salaries to employees, including security forces. Hamas said this week it had inherited an authority that was more than $1.3 billion in debt.


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