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Egypt Urges Rice to Hold Off Cutting Funds to Hamas

Egypt's foreign minister said Tuesday it would be premature to cut off international aid for a Palestinian government, even if Hamas is at its helm, dashing Bush administration hopes for a unified front as Secretary of State Condoleezza Rice stood stiffly at his side.

"We should give Hamas time," Foreign Minister Ahmed Aboul Gheit said. "I'm sure that Hamas will develop, will evolve. We should not prejudge the issue."

That was not the message Rice had hoped to hear from Egypt, an important U.S. ally and Arab powerbroker. The U.S. has praised Egypt for telling Hamas it must moderate its views now that it has won elections for control of the Palestinian parliament.

Rice, making her first trip to the region since last month's Hamas victory, stood alongside Gheit as he spoke.

"If the new Palestinian government led by Hamas is going to be able to meet the aspirations of the Palestinian people for a peaceful life, for a better life, for a life in which there's economic development, it goes without saying that you cannot have one foot in the camp of terror and the other foot in the camp of politics," Rice said during a crowded and sometimes raucous press conference with Gheit.

The United States and the European Union consider Hamas a terrorist group and say they will have no official dealings with its members, complicating both international aid and the future of the Israeli-Palestinian peace process.

The Bush administration's difficulties seeding political freedom in the Middle East were also on display, despite Rice's repeated assurances that her critiques of "disappointments and setbacks" on the path to Egyptian democracy were offered in candor and friendship.

Rice and Gheit interrupted one another, politely at first, but later with an edge. When Rice called the case of jailed political opposition figure Ayman Nour one of Egypt's setbacks, Gheit's face tightened.

"Due process has been applied," Gheit said coolly, referring to Nour's recent appeal of a stiff prison term on what the Bush administration has called flimsy charges.

Rice and Gheit also differed over the specifics of international action on Iran, although they agreed on the dangers posed by Iran's disputed nuclear program.

The U.N. nuclear watchdog agency voted this month to send Iran's case before the powerful Security Council, which could levy sanctions on the Islamic regime.

The United States says there is no difference between the terms "report" and "refer" when sending a nuclear dossier to the Security Council, but other countries have suggested that a referral carries more weight.

"It is not a referral," Gheit said, raising his index finger.

"In fact, it is," Rice quickly replied.

"There we differ," Gheit said with a smile.

Egypt, which receives about $1 billion in U.S. aid annually, is not itself a significant donor to the perpetually cash-strapped Palestinians. But Egypt holds influence as the first Arab nation to make peace with Israel and a frequent host to Arab-Israeli summits.

Gheit said he opposes Israel's decision to cut off about $55 million in monthly taxes and duties it collects on the Palestinians' behalf. He suggested other kinds of international funding should also continue to flow to Palestinian Authority as the representative of needy people.

With a moribund economy, the Palestinians receive about $1 billion of their annual $1.9 billion budget from overseas donors.

The United States has already moved to sever direct financial ties with the Palestinian Authority, while promising not to abandon humanitarian needs such as funds for immunizations.

The defeated Fatah Party of moderate Palestinian President Mahmoud Abbas still controls the Palestinian Authority while Hamas forms a government. It won a majority in the Palestinian legislature, and new members took their seats last weekend.

Rice's first meeting in Egypt may have been her most important. She sat down with intelligence chief Omar Suleiman, a figure little known outside the region but deeply knowledgeable about Hamas and its players.

The top U.S. diplomat planned meetings Wednesday with Egyptian President Hosni Mubarak and with a group of political dissidents and activists. Rice will also travel to Saudi Arabia for further talks on Hamas and Iran, and to Dubai later this week.