Rice Discusses Palestinians' Financial Situation

Secretary of State Condoleezza Rice talked Monday with other would-be Mideast peacemakers about the financial situation of the Palestinian territories after the Israeli Cabinet halted the transfer of hundreds of millions of dollars in tax money to Palestinians.

Later in the day, Rice was traveling to the Mideast in an effort to solidify Arab allies in Egypt and Saudi Arabia to send Hamas a message to moderate its views and to seek unity against helping fund the militant Islamic Palestinian leadership if it does not.

Monday's conversations between Rice and representatives of Russia, the European Union and theUnited Nations "covered issues of support to the Palestinian people," State Department spokesman Noel Clay said.

He added that those representatives "took note of the Israeli Cabinet's statement of yesterday and particularly its intention to discuss with donors the continuation of humanitarian support."

Hamas has begun forming the first Palestinian government run by the militant Islamic group, considered a terrorist organization by the U.S., the European Union and other Western countries. The group calls for the destruction of Israel and says it will not negotiate with Israelis. It has carried out scores of deadly homicide bombings against the neighboring state.

Rice talked with the negotiating partners, sometimes referred to as the "Quartet of Mideast negotiators," before leaving on the trip to the region, a trip that starts in Egypt.

The Israeli Cabinet decided Sunday to stop the transfer of roughly $55 million a month it collects in taxes and tariffs on behalf of the Palestinian Authority. But the Cabinet declined to adopt tougher restrictions proposed by some Israeli security officials, including sealing off the Gaza Strip from Israel, barring thousands of Palestinian laborers from entering Israel and eliminating all trade with the impoverished area.

The Israeli Cabinet also decided to ask the international community to stop giving money to the Palestinians, though it said humanitarian aid should continue.

Many Western countries have threatened to cut off hundreds of millions of dollars in funding for the Palestinian Authority if Hamas does not moderate its views.

"The United States will continue consultation regarding the immediate financial situation of the interim government," Clay said. "The U.S. intends to stay in very close touch with the Quartet and other international donors regarding their reviews of assistance as a process for forming a new Palestinian government moves ahead."

Hamas assumed control of the Palestinian parliament Saturday after winning 74 of 132 parliament seats in elections Jan. 25.

White House spokesman Scott McClellan said Monday that Hamas can help resolve its problems by choosing moderation and a peaceful approach.

"You cannot be a partner for peace if your policy is the destruction of Israel, and if your policy is based on the use of terror and violence," McClellan said. "That's why the Quartet called on Hamas to renounce violence, to disarm, and to acknowledge Israel's right to exist. Hamas needs to make the decision if they want to be a partner in peace.

"You can't get to the two-state vision that the president outlined if both parties aren't going to be a partner in peace," he said.