The European Union said Friday its freeze of budget aid for the Palestinian Authority stays in effect indefinitely, and again urged Israel to resume transferring to the Ramallah government taxes it collects on goods bound for Palestinian areas.

EU spokeswoman Emma Udwin said the Europeans face a dilemma now that a Palestinian government is led by the Islamic Hamas organization that is sworn to destroy Israel.

While they are keen to resume their annual aid of $617 million, "there can be no business as usual" with a government that will not renounce violence or recognize Israel, Udwin said.

EU officials are discussing the financial crisis of the Palestinians with Russia, the U.N. and the U.S. — Europe's co-sponsors of the "road map" to Mideast pace plan that foresees Palestinians and Israelis living side by side in peace. The next meeting of the so-called "Quartet" is May 9.

Udwin said the EU's April 10 decision to freeze direct budgetary aid to the Palestinian Authority remains in effect indefinitely.

She urged Israel to resume transferring import taxes to the Palestinian Authority.

When the Hamas-led government took office, Israel stopped the transfers, which total some $50 million a month. Israel collects these taxes as Palestinians imports pass through Israeli sea and airports.

"The (tax) money is Palestinian money," Udwin said. "Israel is not a donor" of humanitarian or other aid.

While it has frozen budgetary aid, the EU is continuing to fund health care, education and other humanitarian projects.

Udwin said the freeze of EU funds affects 10 percent of the Palestinian budget. The tax transfers Israel is holding back "account for a much, much larger part of the budget" of the Palestinian Authority and its 140,000 or so employees, Udwin said.

The annual Palestinian budget is about $1.9 billion. The $1.3 billion in foreign aid last year accounted for 32 percent of Palestinian gross domestic product, making Palestinians the biggest per capita recipients of foreign aid in the world.

Half of the $617 million in EU assistance comes from the 25 EU governments. The other half comes from the EU budget, and half of that continues and goes to humanitarian aid.

Udwin said there was no immediate crisis in humanitarian assistance.

On Feb. 27, the European Commission granted $148 million in urgent aid to the previous Palestinian government. That covered $49.4 million for the Palestinian Authority's utility bills; $79 million for health and education projects through the U.N. and $21.6 million to pay for the salaries of Palestinian Authority workers.

While Israel and the United States have applauded the EU freeze of direct aid, the Palestinian government has called it "part of the siege and starvation policy" inspired by Israel and the U.S.