Israel accepts plan to resume aid to Palestinians

JERUSALEM, May 10 (Reuters) Israel accepted today a decision by major Middle East peace brokers to resume some aid payments to the Palestinians -- a move that could ease intense economic pressure on the Hamas-led government.

The Quartet of international mediators -- the United States, Russia, European Union and the United Nations -- agreed on Tuesday to create the new mechanism for funnelling funds to the Palestinians and will run it for a three-month trial period.

The Hamas-led government said it appreciated the Quartet's efforts to ease the burden on the Palestinian people but said they could have gone further, and in a statement criticised the fact that its own authority was likely to be bypassed.

''We were hoping that their decision could be more positive in dealing with the Palestinian government since it is an elected government that represents the Palestinian people.'' The move follows fears expressed by some Quartet members that more pressure on the Hamas-led administration could cause the Palestinian government to collapse, unleashing a deeper humanitarian and security crisis in the West Bank and Gaza.

It was not clear how the mechanism -- yet to be worked out but which the EU is expected to take the lead on -- would function, but it was expected to effectively bypass the Hamas-dominated government and channel funds through the office of Palestinian Authority President Mahmoud Abbas instead.

Israel said it could chip in by releasing, for humanitarian ends, some of the tax money it collects on behalf of the Palestinian Authority but has withheld since Hamas crushed Abbas's long-dominant Fatah faction in January elections.

Hamas is an Islamic militant group officially sworn to Israel's destruction. The United States considers it terrorist.

The Authority relies hugely on foreign aid to pay public sector salaries and run health and welfare services. The monthly budget amounts to about 180 million dollar, two-thirds of which has been paid from foreign aid and donations in the past.

Israel, which pushed hard and successfully for funds to the Palestinians to be cut after Hamas took power in March, said the Quartet's move was acceptable as long as Hamas was sidelined.

''As far as we are concerned, the Quartet's decision to give further humanitarian support to the Palestinian Authority, bypassing the Hamas government, is definitely okay,'' Foreign Minister Tzipi Livni said on Israel's Army Radio.

PALESTINIAN TAXES The European Union, Russia and United Nations had all put pressure on the United States, which has taken the toughest stand against Hamas, to agree to ease the boycott.

Once the new mechanism is agreed -- that could take days or weeks -- it is hoped some salaries to 165,000 Palestinian Authority employees, unpaid since March, will be settled.

However, US officials said a decision had yet to be made on whether the mechanism could be used to pay workers. ''Salaries may or may not be part of it,'' one US official said.

Livni said she had told Quartet counterparts that Israel could free some of 220 million dollsr in frozen Palestinian taxes, on condition it reaches needy Palestinians, not their government.

''Israel will not use this money for salaries but is certainly willing to make additional use of it, above what it has been used for until now, for humanitarian ends,'' Livni said.

The EU's proposal to the Quartet focused on support to the health and education sectors, but did not mention security, which employs around 70,000 people and has been an area of particular concern, with violence on the increase.

''If you need a hospital to be run, and someone has to be paid, he will be paid,'' EU foreign policy chief Javier Solana said after the initiative was announced.

Western powers have called on Hamas to recognise Israel, renounce violence and abide by existing peace agreements if it wants contacts to resume, but Hamas signalled today that it was not any closer to accepting those demands.

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