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Last Updated: Tuesday, 9 May 2006, 17:13 GMT 18:13 UK
Abbas urges end to freeze on aid
Woman begging in Gaza
There are fears poverty will rise if salaries continue to go unpaid
Palestinian leader Mahmoud Abbas has urged Middle East mediators to rethink an international freeze on aid to the Hamas-led administration.

Mr Abbas said the freeze was causing hardship to ordinary people and would lead to further instability.

The aid issue is expected to dominate a meeting of the US, Russia, the EU and the UN, being held in New York.

Secretary of State Condoleezza Rice is expected to announce the US will provide $10m of medical aid (5.4m).

What the ministers are now discussing is a way of funding the Palestinian Authority, perhaps via some kind of trust fund.

Russian Foreign Minister Sergei Lavrov said in between meetings a consensus was emerging over a sort of mechanism that would allow the Authority to function normally.

The World Bank has already warned withholding aid could set back efforts to build a Palestinian state by "a dozen years".

Many Palestinian public workers have not been paid since March.

But the US says Hamas is a terrorist organisation, and must renounce violence and recognise Israel - demands dismissed by Hamas.

Economic squeeze

In a letter to the Middle East Quartet of mediators, Mr Abbas said a way should be found to restore the flow of Western aid.

Palestinian Prime Minister Ismail Haniya
I am sending an urgent message to the Quartet: it should rethink its precipitous decisions which have imposed a siege against our people
Ismail Haniya
Palestinian Prime Minister
"Western and Arab donors should realise that the Palestinian people are suffering hardships and the international community which believes in liberty, justice and human rights should not be prepared to accept such a situation," he said, quoted by AFP news agency.

"We have formulated propositions so that aid can reach the Palestinian people ... to allow us to confront the needs of everyday life".

The US officials said on Tuesday that some $4m of special medical aid would be delivered to NGO clinics as early as Wednesday.

The remaining $6m will be delivered through Unicef to those with urgent needs.

Despite approving the new aid payments, the US has re-iterated its belief that any failure to cover the needs of the Palestinian people is the responsibility of Hamas alone, says the BBC's Jonathan Beale in Washington.

'Urgent message'

Meanwhile Hamas Prime Minister Ismail Haniya said the West had acted hastily and should think again, resisting US pressure to maintain the freeze.

$116m: PA's monthly wage bill
PA employs 165,000 people
25% of people in West Bank and Gaza depend on PA wages

"Today, I am sending an urgent message to the quartet: it should rethink its precipitous decisions which have imposed a siege against our people," he said.

Last year the Palestinian Authority had a budget of $2bn (1bn) - about half of which came from foreign donors.

The US and the EU cut off direct financial aid to the Palestinians after Hamas, which won elections in January, formed a government.

Israel is also withholding taxes worth $55m a month it collects on the Palestinians' behalf.

Alternative proposals

Arab funds sent to ease the crisis have so far not reached workers because of banks' fears that the US will punish them for doing business with Hamas.

The World Bank has helped funnel donor aid to the Palestinians, buy says the failure to pay the salaries of some 165,000 government workers could lead to a breakdown of discipline in the security forces and the civil service.

During Tuesday's talks France is expected to suggest bypassing the Hamas-run finance ministry.

Foreign ministers from Saudi Arabia, Egypt and Jordan were also to address the quartet before it met in private.

Correspondents say they may back the French proposal, or suggest that salaries should be paid through Mr Abbas' office.

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