U.S. to Resume Direct Financial Aid to Palestinians

June 18 (Bloomberg) -- The U.S. will restore direct financial aid to the Palestinian Authority to support the emergency government set up by President Mahmoud Abbas, Secretary of State Condoleezza Rice said.

The decision to resume assistance after the violent Hamas takeover of the Gaza Strip followed a similar European Union action to end a financial embargo on the Palestinian Authority. The U.S. and EU imposed the aid limits after last year's parliamentary election victory by Hamas, which refuses to recognize Israel and which the U.S. and EU regard as a terrorist organization.

``A fundamental choice confronts Palestinians and all people in the Middle East,'' Rice said at a news conference today in Washington. ``More clearly now than ever, it is a choice between a violent extremism on the one hand and tolerance and responsibility on the other.''

Rice said the U.S. rejects the division of the ``Palestinian nation'' represented by the Gaza takeover. ``It is the position of the U.S. that there is one Palestinian people and there should be one Palestinian state,'' she said.

The U.S. will contribute $40 million to the United Nations Relief and Works Agency to address humanitarian needs in Gaza, Rice said. The agency offers health care and educational services.

EU Aid

Earlier today, the EU announced it was resuming direct aid to the Abbas's government and called on Israel to back Abbas as the only legitimate Palestinian leader. The EU had been the biggest donor to the Palestinians, providing 259 million euros ($347 million) in the first half of 2006.

President George W. Bush spoke earlier in the day by telephone with Abbas and pledged support without offering immediate backing for the resumption of peace talks, a step sought by the Palestinian leader.

``What is important is that you have to have a partner who is committed to peace, and we believe president Abbas is,'' White House Press Secretary Tony Snow told reporters in Washington, in describing the call.

Nabil Abu Rudeineh, an aide to Abbas, said at a news conference in the West Bank city of Ramallah today that Israel and the so-called Quartet of powers backing a Middle East peace agreement, which includes the U.S., should resume peace talks immediately.

Abbas's new government, which is committed to the 1994 Oslo peace accords, is ``a test of Israel's good faith'' toward the peace process, he said. The charter of Hamas, an Arabic acronym for Islamic Resistance Movement, calls for the destruction of the Jewish state.

Bush and Abbas talked a few hours before Israeli Prime Minister Ehud Olmert arrived in Washington to draw up a new blueprint with Bush for making peace with the Palestinians. Olmert meets tonight with Rice and with Bush tomorrow.