Array

TEHRAN, Apr 16 (Reuters) Iran is giving 50 million dollars to the cash-strapped Palestinian Authority to fill gaps left by Western aid cuts, Foreign Minister Manouchehr Mottaki said today.

The donation will help make up the shortfall left by the aid cut-off by the United States and the European Union and Israel's freezing of the transfer of about $50 million a month in tax and customs receipts to the Hamas-controlled Palestinian government.

''I am honoured to announce that Iran has donated $50 million to help the Palestinian nation,'' Mottaki said in a televised speech to a conference in Tehran on the Palestinian issue.

Mottaki said the gift was Iran's duty as a friend of the Palestinians, but did not say how or when it would reach them.

Iran has been at odds with the United States since its 1979 Islamic revolution, and has refused to recognise Israel.

Washington and the European Union froze aid to the Hamas-led government because the Islamist group did not comply with their demand that it recognise Israel, renounce violence and abide by interim peace agreements.

The Palestinian economy has been crippled during years of fighting with Israel, and Palestinians are dependent on foreign aid totalling more than $1 billion a year.

Mottaki called on Muslims around the world to support the Palestinians. ''The Islamic world should help the new Palestinian government to overcome its current problems,'' he said.

Hamas, which took office on March 29, faces a financial crisis and a struggle to revive an economy suffering from widespread poverty and corruption and high unemployment.

It has called on Arab states to make up the shortfall but has not even been able to find a bank willing to handle its finances.

The 22-member Arab League promised last month to maintain aid to the Palestinian Authority at around $55 million a month.

Hamas, which carried out many suicide bombings in Israel during the uprising against Israeli occupation but has largely observed a truce for the past year, has repeatedly said it has no intention of recognising the Jewish state.

But it has offered a long-term truce if Israel fully withdraws from land captured in the 1967 Middle East war.

Israel has dismissed such an offer as a non-starter and vowed not to negotiate with the group.

U S and Israeli officials are concerned that Tehran, which also refuses to recognise Israel, will gain influence over the Hamas-led government and make it harder to reach a Middle East peace settlement.

REUTERS CH KN2244