Rice meets Palestinian minister

US Secretary of State Condoleezza Rice has met the Palestinian Finance Minister, Salam Fayyad.

This is the highest-level contact between a US official and a minister in the new Palestinian unity government.

Ms Rice met Mr Fayyad, an independent, while he was holding private talks with the US Middle East envoy, David Welch.

The United States refuses to deal with ministers from the Hamas group which Washington, the EU and Israel consider to be a terrorist organisation.

Easing restrictions

Mr Fayyad is a respected former World Bank official and was a finance minister under former Palestinian Authority leader Yasser Arafat. He is not allied to any Palestinian faction.

He and Ms Rice discussed ways to ease the Palestinian economic crisis, Mr Fayyad said.

The Palestinian minister has been in Europe and Washington pressing for an easing of banking restrictions that have impeded the delivery of international aid to Palestinians.

Western donors suspended direct aid to the Palestinian Authority after Hamas won the Palestinian election in January last year.

Palestinian politicians hoped that the formation of a government of national unity in March would help to persuade donors to end their boycott.

The boycott remains, but international funding goes directly to humanitarian projects, bypassing Hamas-run ministries.

‘Things are evolving in a positive way,‘ Mr Fayyad commented about his efforts to smooth the delivery of aid.

On wider issues, he said: ‘We are encouraged by the efforts Secretary Rice has been making to re-engage the parties.‘

During a visit to the region last in March, Ms Rice instituted fortnightly meetings between the Palestinian Authority President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert.