U.S., Europe Cut Aid to Palestinians

The United States and the European Union yesterday formally suspended projects and aid that might benefit the Hamas-led Palestinian government in a bid to pressure the radical Islamic group to recognize Israel and renounce violence. The U.S. aid cut was especially dramatic, with a freeze or termination of about half of $600 million that Congress had appropriated to assist the Palestinians.

After more than a decade of sustained effort by the United States and European governments to build up Palestinian institutions and infrastructure, the parallel announcements represent a sudden retrenchment by the international community from the life of the Palestinians.

Hamas leaders, who unexpectedly triumphed in legislative elections earlier this year, decried the actions as "blackmail," saying they were designed to punish the Palestinians for their electoral choices. The United States and the European Union have designated Hamas, known formally as the Islamic Resistance Movement, a terrorist organization.

The European Union, the largest donor to the cash-strapped Palestinian Authority, announced it had halted direct payments to the government and would consider other steps when foreign ministers of the 25-nation organization meet in Luxembourg on Monday.

Meanwhile, as expected, the State Department detailed its plan to curtail assistance, though officials also sought to soften the impact by emphasizing a relatively modest increase in humanitarian aid.

The State Department documents indicate that about $600 million had been appropriated by Congress in recent years for the Palestinians that had not yet been spent. Under the new allocations, the United States will suspend or cancel $411 million in planned programs, including road and water projects, small-business development, and electoral support.

One-quarter of that money will be redirected to support basic humanitarian needs, including food, health and education, and to promote political alternatives to Hamas. Combined with other previously appropriated funds, the administration allocated $300 million for such humanitarian assistance, including boosting aid to the main U.N. agency for Palestinian refugees by 30 percent, to $135 million, to support an emergency appeal for more funds.

About $165 million of the suspended projects, such as one dedicated to speeding passage through border crossings, will be subject to further review to determine if they can be fulfilled without working with the Hamas-led government.

With the withdrawal of international aid, Hamas has failed to make its monthly payroll for 140,000 workers, who support an estimated 1 million Palestinians. Few expect the new U.S. humanitarian aid to make up the difference.

"I don't think there is much doubt that the Palestinian people will suffer" because of the aid cuts, said Rep. Jim Kolbe (R-Ariz.), chairman of the House Appropriations subcommittee that handles foreign assistance. But he said the Hamas government was responsible for the situation because it had refused to accept international demands to give up its campaign to destroy Israel.

Kolbe, who was briefed on the administration's plan yesterday, said he was impressed with the administration's effort to prevent any U.S. money from seeping into government ministries or even towns headed by Hamas-linked mayors. "I think they are right on target," Kolbe said. "It's a fine line, a tough one to walk. I am sure there will be slips along the way."

The administration has budgeted $5 million to create an office that would verify that no U.S. funds are being diverted to Hamas entities.

The only exception to the new requirements will be to provide $500,000 in equipment and supplies to help combat an avian flu outbreak in Gaza. The Israeli government had requested the assistance to deal with what Assistant Secretary of State C. David Welch called "a highly unique problem."

"We remain committed to the vision that President Bush has laid out for a two-state solution," Welch told reporters in outlining the plan. But "absent a commitment by the Hamas government to these preconditions, we cannot see them as a partner for peace."