By David McKeeby
USINFO Staff Writer

Washington - The United States is lifting financial and diplomatic restrictions on the Palestinian Authority and will donate $40 million to U.N. programs serving the Palestinian Territories, Secretary of State Condoleezza Rice says.

“We intend to lift our financial restrictions on the Palestinian government, which has accepted previous agreements with Israel and rejects the path of violence,” Rice said June 18. 

The announcement follows Palestinian President Mahmoud Abbas’ June 17 formation of a new West Bank-based "emergency government" after Hamas seized control of the Gaza Strip.  The United States has designated Hamas as a foreign terrorist organization.

President Bush spoke with Abbas by telephone to pledge U.S. support for his new administration, White House spokesman Tony Snow said June 18.

In the 15-minute call, Abbas briefed Bush on his actions to dissolve the Fatah-Hamas "unity government," outlaw Hamas militia forces and swear in a new Cabinet headed by former World Bank economist Salam Fayyad, Snow said.

"What's important is, you have to have a partner who is committed to peace, and we believe that President Abbas is," Snow said.  "And therefore we are committed to working with this new emergency government."

Hamas’ refusal to recognize Israel has blocked progress on Middle East peace talks since the party came to power in January 2006 elections.  The United States and the European Union were among numerous countries and organizations to place sharp restrictions on aid as long as Hamas controlled the parliament. 

Earlier in the day, the European Union announced that it also would resume direct financial aid to the Palestinian Authority. 

Israeli officials say they may consider releasing hundreds of millions of dollars of Palestinian tax revenues frozen when the Hamas-led government took power, a topic likely to come up when Bush meets with Israeli Prime Minister Ehud Olmert at the White House June 19.

But while a new government brings new opportunities, Rice rejected Hamas’ attempt to divide the Palestinian people by seizing Gaza.  To help ease the suffering of all Palestinians, she said that the United States would donate $40 million to the U.N. Relief and Works Agency to deliver humanitarian aid and funds for hospitals and schools specifically to the 1.5 million people of Gaza.

"It is the position of the U.S. that there is one Palestinian people and there should be one Palestinian state," Rice said.

The secretary said she would be working with Congress to shift $86 million previously allocated for Palestinian security forces to democracy and development programs aimed at helping the Palestinian Authority deliver essential services such as better roads and clean drinking water.

Rice said she also would continue working with Israeli and Palestinian leaders and through other governments toward a Palestinian state.

"Hamas has made its choice. It has sought to attempt to extinguish democratic debate with violence and to impose its extremist agenda on the Palestinian people in Gaza,” Rice said.  “Now responsible Palestinians are making their choice, and it is the duty of the international community to support those Palestinians who wish to build a better life and a future of peace.”

For more information, see The Middle East: A Vision for the Future.