EU cuts off aid to Hamas-led PA

THE European Union's executive office yesterday cut off direct aid payments to the Hamas-led Palestinian government because of its refusal to renounce violence and recognise Israel, EU officials said yesterday.

The decision - condemned by Hamas officials but welcomed by the Israeli government as a sign of a growing international consensus - effectively stops the next instalment of some €30 million in projects aimed at funding hospitals, utilities and education run by the UN, Red Cross and other groups.

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 on Monday to also freeze their governments' bilateral aid to the Palestinians. Britain and the Netherlands have already taken such a step.

Later, a US official said that America would cancel or suspend more than €198m in projects aimed at assisting Palestinians.

EU aid to the Palestinians totals some €500m per year - the bloc is the Palestinians' largest donor.

While Hamas condemned the EU move, one senior Hamas leader said the group is ready for a "two-state" solution with Israel, a softening in Hamas' position that would imply recognition of the Jewish state.