Palestinians Give Back Some U.S. Money Before Hamas Takeover

Palestinian leaders have returned most of the money the United States donated directly to the government and will send back the rest before the militant Hamas organization takes over, a State Department official said Thursday.

The Bush administration said it serves the U.S. national interest to continue some funding for the Palestinian people despite the likelihood that their government will be led by an Islamic movement that refuses to accept Israel's right to exist.

The current secular Palestinian government turned over more than $30 million on Wednesday, most of it money the Bush administration had approved last year for development projects in the Gaza Strip, State Department Assistant Secretary David Welch told Congress.

The current government, led by Palestinian President Mahmoud Abbas' moderate Fatah Party, agreed under U.S. pressure to return about $46 million in unspent direct donations.

Welch said some of that money will probably be redirected to humanitarian projects that are not funded directly through the government.

"Because it serves important U.S. national interests, we are looking for ways to help the Palestinian people, particularly through provision of assistance to help meet basic humanitarian needs," Welch told the House International Relations Committee.

His words acknowledge that the United States is concerned both about helping an impoverished people and about the public relations consequences in the Arab world if the United States appears callous and legalistic.

At the same time, Welch used strong language to repeat a U.S. pledge to isolate Hamas, which the United States and the European Union list as a terrorist organization.

"We have not, do not and will not provide assistance to Hamas, in government or out of government," Welch said.

U.S. officials are going over all aid to the Palestinians "line by line" to ensure that no money goes to Hamas, Welch said. Results of that review are due soon, perhaps after Secretary of State Condoleezza Rice returns from India and Pakistan next week.

Welch and other U.S. officials testifying Thursday did not address the larger question hanging over international funding for the Palestinians under a Hamas government: the degree that any outside donation for any purpose serves Hamas, since it is cash that a Hamas government does not have to raise from other sources.

The Palestinian Authority gets about $1 billion of its annual $1.9 billion budget from overseas donors, with European nations the largest contributors.

Committee Chairman Henry Hyde, R-Ill., illustrated the complexity of funding decisions when he noted that about 80 percent of health clinics in the Palestinian territories are state-run.

It would be theoretically possible for U.S. officials to channel aid into health projects not affiliated with state-run clinics, but U.S. officials acknowledge they are in a quandary. The United States estimates that more than half the Palestinian population gets health care from state-run clinics and say that group represents the poorest and neediest.

Hamas has claimed responsibility for dozens of suicide attacks on Israel, but it has observed an unofficial cease-fire for the past year.

Hamas leaders have refused to renounce violence or make other concessions since winning a majority of seats in the Palestinian legislature. U.S. officials hope that international pressure, including the threat of withholding badly needed aid, will force Hamas to moderate.