The United States, Israel and European states are prepared to ease a ban on aid to the Palestinian government that President Mahmoud Abbas is forming in the West Bank after sacking Hamas, officials said on Friday.
Palestinian officials said they were informed by the Bush administration that it would lift aid restrictions, first imposed on the Palestinian Authority when Hamas came to power in March 2006, once Abbas's emergency government was in place in the occupied West Bank.
Western and Israeli officials said the goal would be to strengthen Abbas, his secular Fatah faction and other "moderates" in the West Bank, while isolating Hamas who seized control of the Gaza Strip in fierce fighting.
Abbas ordered the Hamas-led government disbanded on Thursday after the Islamist group's bloody take-over of the Gaza Strip. Hamas said Abbas's order amounted to a coup and that Prime Minister Ismail Haniyeh, a Hamas leader, remained in power.
Senior Israeli and Western officials said Prime Minister Ehud Olmert and US President George W. Bush would discuss at a meeting next week a series of "gestures" they planned to make, including the release to Abbas of a portion of the Palestinian Authority's tax revenues being withheld by Israel.
An official in Olmert's office said Abbas's dismissal of the Hamas-led government cleared the way for Olmert to "cooperate with the moderates, headed by Abu Mazen (Abbas), in both the security and the financial spheres".
Israeli officials estimated that $300 million to $400 million in Palestinian tax revenues could be transferred, short of the $700 million sought by Abbas. Israeli officials say the rest of the money has been frozen by court order.
European diplomats said some European Union member states were prepared to steer funds to Abbas in co-ordination with Washington, though it was unclear how much and how soon. "Abu Mazen has strongly requested that we support him fully," one EU diplomat said, adding that the request was viewed favourably.
An economic and diplomatic embargo of the Hamas administration in Gaza would remain in place and would be tightened in some areas, particularly along the Egyptian border.
Officials said the US strategy was based on the premise that strengthening Abbas, and reviving the peace process through him in the West Bank, would serve to marginalise Hamas and increase Fatah's chances of winning any future elections. Western donors led by the United States cut off direct financial aid to the Palestinian Authority in March 2006 after Hamas defeated Abbas's Fatah faction in parliamentary elections.
Coupled with Israel's withholding of tax revenues that it collects on the Palestinians' behalf - the Authority's main domestic source of funding - the sanctions have pushed the Hamas-led government to the brink of financial collapse.
A senior Israeli official involved in the funding issue said Israel would go along with US efforts to "throw full-fledged support behind (Abbas) and build him up in the West Bank".
In addition to handing over tax funds to Abbas, Washington wants Israel to remove several checkpoints and roadblocks that restrict travel within the West Bank.
David Makovsky of the Washington Institute for Near East Policy said resuming aid would show Palestinians "there's a real contrast between the way Hamas rules in Gaza and Abbas's rules in the West Bank. Let them see that moderation pays".
A senior Western diplomat said the biggest question was whether Abbas's emergency government would send money to the Gaza Strip to pay for salaries and other expenses.
NEW PALESTINIAN PM:
Palestinian President Mahmoud Abbas appointed Salam Fayyad, a Western-backed independent deputy, on Friday to serve as prime minister of an emergency government in what Hamas said amounted to a coup. Fayyad immediately started consultations with Palestinian leaders on the make-up of his cabinet, officials said, drawing fire from Hamas Islamists whose government was sacked by Abbas on Thursday following Hamas's bloody take-over of the Gaza Strip.
Fayyad, who has good relations with Western governments, had served as finance minister in the unity government between Hamas Islamists and Abbas's secular Fatah faction until it was disbanded.