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Palestinians discuss funds crisis and security row

By Staff
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GAZA, May 6 (Reuters) Palestinian leaders today stepped up efforts to resolve disputes over security and end an international financial boycott threatening to bankrupt the Hamas-led government, officials said.

Aides to Palestinian President Mahmoud Abbas had talks with Prime Minister Ismail Haniyeh, whose Hamas militant group defeated Abbas's Fatah party in a January election, to prepare the ground for Abbas-Haniyeh talks expected later today.

Abbas aide Azzam al-Ahmed, the head of Fatah's parliamentary delegation, told reporters he had agreed with Haniyeh at the Gaza talks that a U S-led suspension of aid to the Palestinian Authority amounted to punishment of all Palestinians.

''We discussed how to get out of this problem and how to unify the Palestinian people ahead of a comprehensive dialogue,'' al-Ahmed said, adding he hoped ''a more realistic formula to deal with the international community can be reached''.

He said Abbas and Haniyeh would discuss the issue later on Saturday in their first scheduled talks in about a month.

The United States and the European Union have followed Israel and frozen direct aid to the Palestinian Authority to try to force Hamas to recognise Israel and abide by interim peace deals. Hamas's charter calls for the Jewish state's destruction.

The financial boycott has created a severe crisis, with the Palestinian government unable to pay salaries to 165,000 public employees since March.

Besides the aid cuts, the Palestinian government has been unable to receive funds from abroad because banks fear sanctions by the United States.

The economic sanctions have prompted concerns of a possible humanitarian crisis and a new flare-up of Middle East violence.

Arab countries such as Saudi Arabia, Egypt and Jordan have pressed Washington and other Middle East peace brokers to find ways to continue channelling funds to the Gaza Strip and occupied West Bank.

Yesterday, the European Commission proposed it continue to funnel funds for basic Palestinian services via Abbas, instead of the Hamas government.

Haniyeh has said he would not object to money being transferred through Abbas's office so long as it ends up in the Palestinian Finance Ministry's account.

The Hamas leader has also said he plans to discuss with Abbas a festering dispute over security responsibilities.

Last month, Hamas set up a new 3,000-member security force over Abbas's objections, saying it was intended as a backup that would eventually be integrated with the regular police, and to protect government officials if they came under attack.

REUTERS PM KN2150

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