Iran on Wednesday offered to help finance a Palestinian Authority run by the Hamas militant group, state radio said in a report prompting Israel to warn it would do all it legally could to stop the Palestinians from receiving the money.
The secretary of Iran's Supreme National Security Council, Ali Larijani, announced the offer after a meeting with Khaled Mashaal, the political leader of Hamas, the report said.
Larijani said the decision was taken after the United States said it would not provide aid to an authority governed by Hamas until the group renounces violence, recognizes Israel and agrees to abide by existing agreements between Israel and the Palestinians.
"The United States proved that it would not support democracy after it cut its aid to the Palestinian government after Hamas won the elections. We will certainly help the Palestinians," Larijani said, according to the radio.
The United States and European Union, which consider Hamas a terrorist group, have said they will halt their grants of hundreds of millions of dollars of aid to the Palestinian Authority after a Hamas government takes office unless it changes its attitude toward Israel and violence.
Hamas has long called for the destruction of Israel and has refused to negotiate with the Jewish state. Its leaders have refused to change their policies since the group won last month's Palestinian elections by a landslide.
Israel regards Iran as a pariah for its support of militant groups such as Hamas and the Lebanese Hezbollah, and it accuses Tehran of seeking to produce nuclear weapons — a charge Iran denies. Iranian President Mahmoud Ahmadinejad recently said Israel should be "wiped out."
Asked if Israel would try to block the Iranian money, Israeli Foreign Ministry spokesman Mark Regev said that since the money would be going to a "terrorist" leadership, "we would be entitled to use all legal means to prevent that money from reaching its destination."
In Washington, State Department deputy spokesman Adam Ereli said he had seen the reports concerning Iran's willingness to finance a Hamas government, but he did not verify them.
"Iran's support of terror and Iran's support of violence as an acceptable way to achieve political aspirations is contrary to the policy and the statements of President Abbas, it's contrary to the policies and statements of the Quartet, it's, frankly, contrary to the actions of the civilized world," Ereli said.
On Tuesday, a moderate Hamas leader, Ismail Haniyeh, was asked to form a government by Palestinian leader Mahmoud Abbas.
Mashaal and his delegation were in Iran in the latest stop of a tour of Arab and Islamic nations aimed at drumming up support as Israel and the United States move to cut off money to the Palestinians.
Iran's supreme leader, Ayatollah Ali Khamenei, on Monday called for Muslim nations to provide aid to a Hamas-led government and expressed support for the group's refusal to recognize Israel.
Ahmadinejad also indicated Monday that Hamas should not fear the West's threat to cut off funds.
"Since the divine treasures are infinite, you should not be concerned about economic issues," IRNA quoted Ahmadinejad as saying in an apparent reference to Iran's oil wealth.
Israel and the United States have long accused Iran of giving financial and material support to Hamas. But Iran has always replied it gives only moral backing.
Hamas suicide bombers have killed hundreds of Israelis. But the group has respected an informal cease-fire since early last year.