West Opening Dialogue With Palestinians

Palestinian President Mahmoud Abbas, center, attends a funeral ceremony for Ez Aldeen Al Sharef, a high official in his office who died in Jordan on Tuesday, in the West Bank city of Ramallah Wednesday, March 21, 2007. The formation of a new Palestinian government has pried open diplomatic floodgates, with a clutch of high-ranking European officials making their way to Ramallah to meet with Cabinet ministers they'd shunned for the past year. Walking left is Tayeb Abdel Rahim, a top aide to Abbas. (AP Photo/Nasser Shiyoukhi) (Nasser Shiyoukhi - AP)

RAMALLAH, West Bank -- A top European Union envoy met with a senior member of the new Palestinian government Wednesday, joining the U.S. in ending a year of ostracism and leaving Israel increasingly isolated in its demand for a total boycott of the Hamas-Fatah coalition.

However, the Islamic militant Hamas itself is still being shunned, and economic sanctions remain in place.

The boycott has been a costly policy, international aid officials indicated Wednesday.

Donor countries had to send more aid to the Palestinians in 2006 than the year before to ease a humanitarian crisis set off by the embargo. Despite the increased aid, public institutions and services suffered because the funds bypassed the government, and the Palestinian economy shrank by 6.6 percent.

The Palestinians hope the government installed Saturday, an alliance of Hamas and the Fatah Party of President Mahmoud Abbas, will lead them out of international isolation _ even though the coalition did not meet international conditions for acceptance, such as recognizing Israel's right to exist.

Officials said Wednesday the first signs are encouraging, despite Israel's decision to shun the new government and rule out a resumption of peace talks. "I think the international community is accepting and dealing with this national unity government," Information Minister Mustafa Barghouti said.

The U.S. consul general in Jerusalem, Jacob Walles, met Tuesday with Finance Minister Salam Fayyad, a respected economist who had earned the trust of the Bush administration in his first term in the Treasury, before Hamas came to power last year.

The meeting came despite initial U.S. criticism of the Palestinian government's failure to meet the international conditions.

Speaking to the Arabic satellite TV station Al-Jazeera, Walles praised Fayyad. "We look to work with him and others," Walles said in comments dubbed into Arabic. "The environment is difficult but we continue to work with the Palestinians and offer assistance in order to achieve the vision of a Palestinian state."

In another show of support, the top EU envoy to the Middle East, Marc Otte, held talks with Fayyad on Wednesday, a day after meeting with the new Palestinian foreign minister, Ziad Abu Amr.

Both Fayyad and Abu Amr are independents.

The Belgian and Swedish foreign ministers announced plans to meet with Abu Amr in coming days. The ambassadors of Switzerland and Russia are to see the foreign minister Friday, and Switzerland and France have sent invitations for official visits, said Deputy Foreign Minister Ahmed Subuh.