WASHINGTON – The United States will cancel or suspend up to $411 million in Palestinian aid out of concern the money could help the new Hamas leaders of the government there, the State Department announced Friday.
At the same time, the United States will redirect some of that money to humanitarian projects for the impoverished Palestinian people. Humanitarian assistance will rise by 57 percent to $287 million over several years, the department said.
Another $13 million will go for new vetting procedures, including a special inspector general, to ensure that even humanitarian aid funneled through the U.N. Relief Agency and approved charities does not end up in Hamas hands, the department said.
The money being cut or suspended includes funds for public works construction, training public officials and revitalizing the Palestinian economy. Of the $411 million that could be cut over several years, $165 million is still under review by U.S. officials.
The United States and the European Union consider Hamas a terrorist organization and each country bans official dealings with it. Hamas won parliamentary elections in the Palestinian territories in January and it formed a government that took power this month. The United States began a review of its aid package to the Palestinians shortly after the election, and has already eliminated direct aid to the Palestinian Authority.
"It is our desire to help provide for the basic humanitarian needs of the Palestinian people," Secretary of State Condoleezza Rice said in a statement read to reporters by department spokesman Sean McCormack. But she added, "The new Palestinian government must take responsibility for the consequences of its policies."
The United States has long channeled most of its assistance to the Palestinians through indirect means, to humanitarian efforts such as food, maternal and child health programs and education and also for projects that only indirectly benefited the Palestinian government. These include such projects as roads, water works and training programs for judges, electoral workers and others.
The United States will redirect about $100 million from canceled projects to humanitarian assistance, the official said. Some of the remaining pot of approximately $140 million will be eaten up in the process of ending or disengaging from those projects, but it is not clear where all the money will go.
The official said the State Department will consult with Congress on the next move. Congress has already approved all the spending under review, and has not yet considered how to apportion new money now that Hamas is in place.
The West has been threatening to cut nearly $1 billion in annual aid to the Palestinians since the election, which turned out the moderate Fatah Party that Washington had hoped could gradually move toward peace with Israel. Hamas has refused to renounce violence or recognize Israel's right to exist.
Without money from the Arab world, Europe and the United States, a Hamas-led government would be nearly broke.
President Bush and Secretary of State Condoleezza Rice have said Washington would not give aid to a Hamas-led government unless it changed what they call extremist policies.
Also Friday, the European Union's executive office cut off direct aid payments to the Hamas-led Palestinian government.
The decision — condemned by Hamas officials but welcomed by the Israeli government as a sign of a growing international consensus — effectively stops the next installment of some $36.9 million in projects aimed at funding hospitals, utilities and education run by the United Nations, Red Cross and other groups.
As with the United States, the vast majority of the EU's aid package does not go to the Palestinian Authority government. However, the decision has symbolic value and will add to the pressure on the Hamas leadership.
The funds are considered vital to keep the Palestinian economy afloat — and the impact could be even stronger if EU foreign ministers decide at a meeting Monday to also freeze their governments' bilateral aid to the Palestinians. Britain and the Netherlands have already taken such a step.
EU aid to the Palestinians totals more than $600 million per year and the bloc is the Palestinians' largest donor. The frozen EU funds amount to half of that annual figure, with the rest coming from the bilateral agreements to be scrutinized at Monday's EU meeting.
Hamas condemned the move, which came at a time of intense maneuvering among Palestinian leaders to find a way out of the new government's isolation. One senior Hamas leader said Friday the group is ready for a "two-state" solution with Israel, a softening in Hamas' position that would imply recognition of the Jewish state for the first time.
Palestinian Prime Minister Ismail Haniyeh said the EU move to freeze funds "will increase the suffering" of Palestinians.