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Britain denies trust fund would hurt Hamas boycott

By Staff
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JERUSALEM, May 7 (Reuters) A proposed trust fund for donors to pay overdue Palestinian salaries would undercut Hamas, not strengthen it, says a British document meant to increase pressure on the United States to drop objections to the plan.

Britain circulated the memo on the proposal, aimed at averting a collapse of basic services provided by the Palestinian Authority, to major donors ahead of a meeting on Tuesday of the Quartet of Middle East mediators, Western diplomats said.

The four-page document argues, in response to US efforts to block creation of such a fund, that it ''will not undermine the diplomatic effort'' to persuade Hamas to renounce violence, recognise Israel and abide by interim peace accords.

The United States is concerned that allowing the international community to pay Palestinians' salaries would take pressure off Hamas, Western diplomats said.

But Britain argues that if Palestinians end up receiving crucial aid through channels other than Hamas, the Islamic militant group stands to lose ''a big part of its street credibility and hence have an incentive to come closer to what the international community wants''.

The British memo says Western donors can fund basic services through the Palestinian Authority even ''while the Hamas government condones terrorist attacks against Israel'' because the purpose of the trust fund is to give humanitarian support.

''Humanitarian aid to the Palestinian people should not be conditional on actions by Hamas,'' the document said.

But it adds that even if Washington agrees to go along with the plan, the proposed trust fund could take at least six weeks to get up and running.

A copy of the May 1 memo was obtained by Reuters today.

The British trust fund proposal is similar to those outlined in recent days by the European Union and France to ease a Palestinian salary crisis that followed the suspension of direct US and EU aid after a Hamas-led government took office in March.

Israel has also halted its transfer of crucial Palestinian tax revenues.

Starved of funds, the Palestinian Authority has been unable to pay salaries to 165,000 public employees since March, prompting concerns of a humanitarian crisis that could trigger an upsurge in West Asia violence.

In an earlier memo, Britain said its goal was to try to ''mitigate the decline in living standards of the Palestinian people and reduce the possibility of domestic instability by sustaining delivery of basic services such as health and education.'' Under the proposal, donors would put money into the trust fund, which would then move the money directly into a commercial bank account outside the Palestinian Authority's control.

The money in the fund would be used for pre-approved services, from workers' salaries to medical supplies. The International Monetary Fund has estimated 45 million dollars a month would be needed for health, education and other basic services.

Because of the aid cuts, the Hamas-led government could be forced to subsist on as little as 25 million dollars a month in domestic revenues, far short of the 140 million dollars that is needed, the latest British document said.

REUTERS SY RK0912

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