The European Union severed political contacts and temporarily suspended direct aid to the Hamas-led Palestinian government on Monday to pressure it to recognise Israel, end violence and accept peace accords.
But ministers of the 25 member states meeting in Luxembourg agreed humanitarian aid to the Palestinian people would continue along with working-level contacts with lower-level officials to make that possible.
"Contacts with government members and the Hamas political establishment have to be currently excluded," Austrian Foreign Minister Ursula Plassnik, representing the EU Presidency, told a news conference.
"But contacts at technical or administrative services level where the necessity is unavoidable, can take place," she said.
Plassnik said the direct aid freeze was to defend taxpayers' interests by ensuring no money went for violence or terrorism.
The EU ministers endorsed the European Commission's move last Friday to suspend direct aid to the government led by the Hamas movement which espouses Israel's destruction. Washington also announced a suspension of aid on Friday and Norway followed suit on Sunday.
The EU move covers direct aid to the Palestinian government and payment of public employee salaries with EU funds through the World Bank, but not humanitarian aid through international and non-governmental organisations.
The EU has been the main donor to the Palestinian Authority, providing an average 500 million euros ($606.2 million) a year, a policy thrown into disarray when Hamas won January polls. The EU views Hamas, an organisation blamed for dozens of suicide attacks in Israel, as a terrorist group.
QUARTET DEMANDS: German Foreign Minister Frank-Walter Steinmeier said the aid decision showed the EU was serious about the need for Hamas to accept the demands of the quartet of Middle East mediators: recognise Israel, end violence and accept past peace accords.
He said it would be reviewed again when EU foreign ministers met again next month, but Plassnick gave no date. Swedish Foreign Minster Carin Jamtin said it would depend on how long it took Hamas to adopt the three principles.
Russia, which makes up the quartet with the EU, the United States and the United Nations, said earlier UN Secretary General Kofi Annan had proposed the quartet meet in New York at the end of April to discuss strategy on Hamas.
EU External Affairs Commissioner Benita Ferrero-Waldner said the aid cut involved money sent "to and through" the Palestinian government. She avoided putting a figure on it but officials said about 30 million euros were currently in the pipeline.
EU foreign policy chief Javier Solana played down the effect on the Palestinian Authority's finances and dismissed talk of an imminent collapse.
"There is still money for that not to happen, and in any case we will support the people as much as we can," he said.
Palestinian Foreign Minister Mahmoud al-Zahar had urged EU ministers not to stop direct aid, saying this would harm Palestinian citizens and they should respect democratic choice.
Zahar appeared to float trial balloons last week by talking of a "two-state solution" - code for co-existence with Israel. But he subsequently denied Hamas was ready for such a solution.
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