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U.S.-Europe Rift Looms on Hamas Aid

WASHINGTON — American-led efforts to block aid to the Hamas-led Plaestinian government are forcing the Islamic fundamentalist movement to backtrack on several fronts, but international support for the financial siege appears to be waning.

With the Palestinian Authority facing bankruptcy and unable to pay salaries to government employees, Hamas is quietly seeking ways to form a unity coalition with its top political foe, the secularist Fatah faction, the Forward has learned. In what some observers see as another sign of economic desperation, Hamas — which has been losing support in Palestinian opinion polls — has indicated a willingness to allow international third parties to pay P.A. employees directly, though the Islamic movement probably would win less credit from the public under such an arrangement.

Hamas also appears to be searching for ways to satisfy international demands that it recognize Israel and disavow terrorism — two steps that it adamantly has refused to take. On Tuesday, a top Hamas official said that the Islamic movement is ready to consider a 2002 Arab League-backed peace plan calling for recognition of Israel in exchange for a complete pullout from Gaza and the West Bank.

In talks with foreign diplomats, the Bush administration has been hailing the recent developments as proof that the strategy of isolating and boycotting the Hamas government is working. But diplomats in Washington say that the united front against Hamas could fall apart over a French proposal — opposed by the Bush administration — to have the European Union set up a fund that the World Bank would manage and use to pay the salaries of the P.A.’s 160,000 civil servants.

The American-French disagreement underscores what some diplomats see as a deeper divide.

Bush administration officials say that the pressure on Hamas will either bring about a gradual change in the movement’s belligerent positions or accelerate the collapse of its government. On the other hand, according to diplomatic sources in Washington, America’s European allies are not pressing for regime change in the territories.

“I have never come across anyone in Europe who wants to engineer the fall of Hamas’s government, both because it’s counterproductive and because we don’t want to tamper with a clean election,” said Jonathan Davidson, senior adviser for political and academic affairs to Washington’s European Commission Delegation.

“[We] are looking for alternative ways to get funding into the hands of the Palestinian people, who need it, without touching the P.A.,” Davidson said. “People are seriously concerned in Europe about the impact of the sudden cutoff in aid to the Palestinian people.”

The debate over the French proposal is expected to come to a head next week, when the international Quartet sponsoring the Israeli-Palestinian peace process — the United States, Russia, the E.U. and the United Nations — meets May 9 in New York.

“This is probably perceived [by the White House] as the first hole in the dike to open up the flow of foreign aid to the Hamas government,” said Aaron David Miller, who advised six American secretaries of state and is now a public policy scholar at the Woodrow Wilson Center in Washington.

In another sign that the international community is losing hope for political or economic progress under the Hamas government, the Quartet has decided not to replace its resigning envoy to the territories, James Wolfensohn. The former president of the World Bank was appointed last year as the Quartet’s special envoy to help create better economic and political conditions for the resumption of Israeli-Palestinian negotiations.

Earlier this year, following Hamas’s electoral victory, Wolfensohn told a congressional panel in Washington that he intended to resign, citing the bleak political situation. Monday, at a farewell event for Wolfensohn in Washington, Secretary of State Condoleezza Rice said that there is no intention to find a replacement for him.

“If we believed that conditions were such that a special envoy could really do his work at this particular time, we wouldn’t be seeking a replacement — Jim Wolfensohn, I hope, would be staying,” Rice said.

Many in Washington say that the elimination of the envoy post also reflects the diminishing role of the Quartet and signals the demise of its road map peace plan.

French President Jacques Chirac first presented France’s proposal to P.A. President Mahmoud Abbas last week. That same week, at a meeting in London, the E.U., the U.N. and Russia all indicated that they would support the resumption of aid that went to paying the salaries of Palestinian government workers. The E.U. is also examining a British proposal to set up a permanent mechanism for supplying humanitarian aid to the Palestinians and funds for salaries of vital employees, such as those in the government-run health sector.

Bush administration officials recently have told their European counterparts that America is not interested in allocating hundreds of millions of dollars for salaries. Teachers and medical staff can be paid with the $30 to $40 million that the P.A. raises each month in taxes, while humanitarian aid and food could be distributed through international nongovernmental organizations.

Washington is reportedly also opposing a plan by the Arab League to deposit salaries directly into the bank accounts of P.A. employees.

For now, despite the budding disagreements between America and its allies, Hamas appears to be feeling the pressure from the American-led campaign to cut off its funding.

Palestinian government employees, including teachers, health staff and policemen, have not been paid for two months. This is the longest they ever have gone without pay. Government salaries are the primary source of income in the small Palestinian economy.

Tensions appear to be mounting between the more militant Hamas officials in Damascus and the movement’s more moderate officials in the territories, who have to cope with the day-to-day challenges of governance.

Although Hamas has yet to soften its positions, the movement has taken several steps under pressure in recent days.

A top Hamas official said Tuesday that the Islamic movement is ready to consider a 2002 peace plan adopted by the Arab League that calls for recognition of Israel in exchange for a complete pullout from Gaza and the West Bank.

“When Israel agrees to the Arab initiative, Hamas will make a decision,” said Moussa Abu Marzouk, the Damascus-based deputy head of Hamas’s political bureau, in an interview with The Associated Press.

Also on Tuesday, the head of the Hamas government, P.A. Prime Minister Ismail Haniyeh, urged terrorist groups to abandon attacks against border crossings, suggesting that in the end they hurt the Palestinian economy.

Another important development, according to independent Palestinian political experts, was Hamas’s agreement to start a “national dialogue” with other factions in order to explore common ground and possibly cooperate to break the Western boycott. According to the experts, who visited Washington last week, the key agenda item in the dialogue would be a discussion of a formula that the Hamas government could endorse to satisfy some of the international demands relating to Israel. One proposal, reportedly from Hamas circles, was for the organization to join the ranks of the PLO with the hope that it would then be considered as having accepted the PLO’s platform, which recognizes Israel, calls for a two-state solution and rejects terrorism.

“After the landslide victory in the elections, Hamas is having difficulty adjusting to the existing political realities,” said Ziad Abu Amr, an independent member of the Palestinian legislature, during a lecture hosted by Washington think tank the Palestine Center.

According to Abu Amr, who as a university professor researched Hamas and currently enjoys good contacts with the movement’s leaders, “The Hamas government is unable to exercise political rule.” The P.A.’s bureaucracy is saturated with Fatah functionaries, and Hamas’s elected or appointed superiors often find it impossible to get Fatah-affiliated civil servants to cooperate, Abu Amr said. This dynamic serves as another incentive for Hamas to share power with other Palestinian factions, sources said, noting that no immediate results are expected from the dialogue.

Hamas is also turning to Arab countries for financial support, but the efforts have been stymied by the American-led effort.

In recent weeks, the Arab League did collect about $50 million from its members for the P.A. However, Arab banks with branches in the West Bank and Gaza refused to transfer the funds to the Palestinian government, fearing that they would be sued for assisting a terrorist organization. Banks that have branches or assets in the United States — almost all major international banks do — can be sued under American law. The large Jordan-based Arab Bank is now facing civil suits totaling more than $800 million for transferring money to the families of Hamas suicide bombers.

“That really puts the clamps down,” said Dennis Lormel, former chief of the FBI’s terrorism finance section. “There is a tremendous deterrent because if those banks have any presence in the U.S., they can be smacked pretty badly.”

To avoid litigation, the Arab banks agreed to transfer funds directly into the private bank accounts of Palestinian government employees using payroll data they will receive from the P.A. By doing that, the banks will avoid sending money to the Palestinian government, which the United States and Europe consider a terrorist entity. Even this arrangement, however, will not exempt banks from liability, said Steven Perles, a Washington lawyer who specializes in terrorism financing.

Even if banks deposit funds into the accounts of P.A. employees, he explained, many of those civil servants are known to be Hamas members. Besides, according to the broad new regulations issued by the administration regarding Hamas, anyone employed by the current Hamas government could be regarded a member of a terrorist entity, he said.

Sources told the Forward that banks, as well as nongovernmental organizations, are imposing extra precautions on themselves when dealing with the P.A., further jeopardizing the Hamas government’s ability to perform.

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