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U.S. may soften stand on Palestinian aid

Written by: Staff
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UNITED NATIONS, May 9 (Reuters) The quartet of Middle East peace brokers haggled today over how to channel aid to the Palestinians, with signs the United States might soften its stand to prevent the collapse of a Hamas-led government.

The group of international mediators -- the United States, Russia, the European Union and the United Nations -- first heard gloomy scenarios from foreign ministers of Egypt, Jordan and Saudi Arabia and then headed into private talks to discuss proposals to ease the crisis.

''It is a difficult situation but I want to say that we are not going to let the Palestinians starve,'' said the European Union's foreign policy chief Javier Solana after talks with the Arab ministers.

A Western diplomatic source close to the discussions said the United States was edging closer to agreeing to a ''temporary international mechanism'' to channel money to pay employees of the Hamas-led Palestinian Authority who have not been paid for the past two months.

''America is softening its position. The Arab foreign ministers made very clear if the Palestinian Authority collapses then you could potentially have a civil war,'' said the source, who asked not to be named as negotiations were at a delicate stage.

He said the money could be handled via a body such as the World Bank which could set up a special account for a limited period. However, he stressed no final decisions had been made.

''The Americans are very clear, it would be limited in duration and limited in its scope,'' he said.

The United States has taken the toughest line against Hamas since it won January elections and made clear on Tuesday that Hamas was to blame for all of its current financial problems.

''Any failure of Hamas to deliver on those needs is that of Hamas alone,'' said a senior State Department official.

The official said the U.S. would make clear in meetings that Hamas had to ''fix the problems'' and it could start off by meeting the demands of the international community, which include recognizing Israel, renouncing violence and signing on to previous Palestinian-Israeli agreements.

NEW U.S. AID While tough on Hamas, Rice was expected to announce an additional million in U.S. funding for medical supplies and equipment for the Palestinians but this would be directed through U.N. agencies and would not reach a Hamas government.

U.S. officials did not immediately comment on whether they were close to agreeing to proposals from the Europeans and the Arab ministers but a spokeswoman for Solana was optimistic.

''We are encouraged and we are working on it (getting the U.S. to agree),'' said Christina Gallach of the EU.

The World Bank warned on Monday the Palestinian Authority could face a breakdown in law and order and basic services unless foreign donors step in to pay the salaries of about 165,000 civil servants.

Several other options are being floated at the quartet meetings, including one to give more money directly to the office of President Mahmoud Abbas, whose Fatah Party lost in January elections to Hamas.

Washington does not restrict funding to Abbas, who wrote a letter to the quartet pleading for help and warning of chaos if the financial squeeze continues.

The Arab League has also offered a plan to deposit donor funds directly into the accounts of government workers, but the United States has blocked this.

After Hamas won Palestinian elections and formed a government in March, the United States and the European Union cut off direct financial aid for the Palestinian Authority.

The authority has been unable to receive funds from abroad because local, regional and international banks fear sanctions by the United States, which regards Hamas as a terrorist organization.

REUTERS CH PC2316

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