The United States backed Israel's right to withhold customs and tax monies collected on behalf of the Palestinians before the militant group Hamas takes power.
President George W. Bush declined to comment on the controversial move which drew fire from the UN Middle East envoy and countries such as Egypt, one of Washington's key regional allies.
But deputy State Department spokesman Adam Ereli said, ‘The US position is this is a sovereign decision for the government of Israel to make. ... We understand that decision.’
Israel announced over the weekend that it would hold back 50 million dollars a month in funds collected for the Palestinians, roughly a third of their budget, even before a Hamas government took office.
Egyptian Foreign Minister Ahmed Abul Gheit condemned the move at a Cairo news conference Tuesday with US Secretary of State Condoleezza Rice as she started a Middle East swing.
Abul Gheit urged giving Hamas time to change its ways after winning legislative elections last month. ‘I'm sure that Hamas will develop, will evolve. We should not prejudge the issue,’ he said.
UN Middle East envoy Alvaro de Soto said Monday the freeze was ‘problematic for several reasons. The first and most obvious one is that these are monies that belong to the Palestinians and should not be withheld in any case.’
The United States, which considers Hamas a 'terrorist' group, has been spearheading a drive to review Western aid to the Palestinians unless the Islamist group renounced its armed struggle against Israel.
‘So long as Hamas does not recognize Israel's right to exist, my view is we don't have a partner in peace, and therefore shouldn't fund a government that is not a partner in peace,’ Bush said.
But Washington and its partners in the Middle East diplomatic ‘quartet’ -- the European Union, United Nations and Russia -- pledged continued support for the interim Palestinian government run by President Mahmud Abbas.
Ereli, noting Rice spoke with her quartet partners by phone on Monday, told reporters that ‘we will be looking at ways to continue to support the interim government of the Palestinian Authority.’
He did not elaborate on plans to deal with the 50 million dollar monthly shortfall, but a senior State Department official who asked not to be named said ‘the quartet is looking at ways of making up the difference.’
US officials estimate the Palestinian Authority's annual budget at 1.9 billion dollars. They have put on hold plans to provide 234 million dollars in US aid this year and are seeking the return of 50 million already disbursed.
But Rice, who is on a three-nation tour of the Middle East, confirmed last week that Washington would continue to supply critical humanitarian aid to the Palestinians via the United Nations and non-governmental groups.