The new Palestinian interior minister from Hamas on Thursday named a Palestinian whose group has carried out attacks on Israel to head a new security force made up of Islamic militants, a direct challenge to the authority of President Mahmoud Abbas.

The minister, Said Siyam, issued a decree appointing Jamal Abu Samhadana, the head of the Popular Resistance Committees, as director general of the Interior Ministry. Samhadana's group is responsible for many of the homemade rockets launched at Israel in recent weeks.

Samhadana, a former security officer who was dismissed for refusing to report for duty during the uprising against Israel, was given the rank of colonel. His group has claimed responsibility for many attacks against Israel and is suspected by some of involvement in the bombing of a U.S. Embassy convoy in Gaza in October 2003, when three Marine security guards were killed.

Khaled Abu Hilal, the interior ministry spokesman, said Siyam was also forming a new security branch that would be answerable only to him to bring law and order to the Palestinian streets.

"This force is going to include the elite of our sons from the freedom fighters and the holy warriors and the best men we have," he said. "It's going to include members of all the resistance branches."

Abbas' office had no immediate response.

In Washington, U.S. State Department spokesman Sean McCormack denounced the move. He said it showed "the true nature and the true tactics of this particular Hamas-led government," and the U.S. would still hold the Palestinian Authority responsible for stopping terror attacks.

Israeli Foreign Ministry official Gideon Meir echoed that. "If someone needed proof about the connection between the Hamas rule and Palestinian terror, this appointment is the ultimate proof for this connection," he told the AP. "It's like allowing the fox to guard the chicken coop."

Abu Hilal said officials have begun recruiting for the new force, but they could not say how it would be structured or how big it would be. He also did not know whether the new force would be paid by the Interior Ministry or serve as volunteers, paid by their militant groups.

After Hamas' Jan. 25 election victory over Abbas' Fatah Party, the Islamic group's leaders said they planned to incorporate some of their militants into the security forces. But the announcement of a completely new force made up of militants appeared to be an effort to counter Abbas' moves to take control of all the other security branches.

Soon after the Hamas-led Cabinet was sworn in late last month, Abbas appointed a longtime ally, Rashid Abu Shbak, to head the three security services that were supposed to fall under Hamas command. Abbas also controls several other security services directly.

Samhadana is high on Israel's wanted list and has been a target of at least one attempted Israeli assassination.

It was unclear whether Samhadana or Abu Shbak would retain ultimate control of the security forces, though any dispute would be resolved in the National Security Council, headed by Abbas.

Abbas directly controls the presidential security unit, the border police and the various intelligence services. The preventive security, which is in charge criminal intelligence, the civil defense, which deals with disasters and the police fall under the Interior Ministry.

Speaking at a mosque in Gaza City, Siyam pledged a major crackdown on crime throughout the Palestinian areas.

"We are going to beat with an iron fist all the people and the groups who are acting illegally," Siyam said. He said he was referring to crime, not armed resistance against Israel.

Israel, the U.S. and European Union have cut off much of the funding that has kept the Palestinian Authority afloat, labeling Hamas a terror organization and refusing to deal with the new government. Hamas has sent dozens of suicide bombers into Israel, and while it has largely observed a truce over the past year, Hamas officials defended a suicide bombing by another group on Monday that killed nine people in Tel Aviv.

The financial crunch is being felt keenly by 165,000 public sector workers, who have not been paid their salary for last month, and Palestinian Finance Minister Omar Abdel Razek told The Associated Press on Thursday that he doesn't know where the money will come from or when.

"I have a strange feeling. For the first time, I find myself in such a dilemma," he said. "But I hope that God will provide a solution."

In the two months between the election and Hamas' assumption of power, the outgoing government of the defeated Fatah Party hired 9,000 more employees, he said. The number of security officers has risen to 80,000, from the 60,000 reported by the last government, he said.

The Palestinian Authority needs about $160 million every month — $118 million for the payroll and $40 million in operating costs, he said. The government has about $30 million in monthly income, but that money is being spent on the most crucial ministries — health and social welfare.