The European Union gave political backing to Palestinian President Mahmoud Abbas's emergency cabinet on Monday and said it would look urgently at restarting direct aid.
EU foreign ministers meeting in Luxembourg said they had decided to resume normal relations with the Palestinians disrupted when Abbas's rivals Hamas won parliamentary elections last year and failed to recognise Israel and renounce violence. In a joint statement they also said they would develop conditions for "urgent and practical" financial help, including direct financial support to the government.
Hamas seized control of the Gaza Strip after routing forces loyal to Abbas last week, prompting him to replace the Hamas-led Palestinian unity government with an emergency cabinet. Hamas rejected the appointment of the new government as a "coup".
"We are extending political support to the Salam Fayyad government," German Foreign Minister Frank-Walter Steinmeier told a news conference on behalf of the EU presidency, referring to Abbas's new prime minister.
Spanish Foreign Minister Miguel Angel Moratinos said this would involve the resumption of direct aid. But EU External Relations Commissioner Benita Ferrero-Waldner, the official charged with overseeing direct financial assistance to the Palestinian Authority, said talks would be needed first with Fayyad to make this possible.
APPEAL TO ISRAEL: She said she wanted to meet him as soon as possible. "I think it's for him to tell us what is most needed and are the conditions in place," she said, adding there were also issues of "financial control and transparency" to clarify.
"The most important is first to have humanitarian aid." The collapse of Abbas's unity government with Hamas prompted Israeli Prime Minister Ehud Olmert to say Israel would release frozen tax revenues and the Bush administration said on Monday it would resume direct aid.
EU foreign ministers appealed to their Israeli counterpart Tzipi Livni during her visit to Luxembourg to follow up on the promise to release some $800 million Palestinian tax revenues. Livni said the creation of the new government sent a message of hope and Israel was willing to work with those who accepted Israel's right to exist, adding there was still a need to meet the Palestinians to discuss transferring the money.
"It is part of our aspiration, part of our goal that the Palestinians understand that there is hope with the moderates," she said. "There are of course certain questions ... but we are not looking for excuses. We believe time is of the essence."
The withholding of the aid and the embargoes have had a paralysing effect on the Palestinian administration and the European Union boosted humanitarian aid to the most needy Palestinians in the meantime.
When it suspended direct aid, nearly half an annual 500 million euros ($670 million) of transfers were flowing through national and local authorities, while much of the rest needed government involvement.
While Washington and Israel want to isolate Hamas economically, diplomatically and militarily in the Gaza Strip, some European diplomats have expressed misgivings.
"The international community does not want two Palestinian states, otherwise it will be impossible to find a solution," said Luxembourg Foreign Minister Jean Asselborn.