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Last Updated: Saturday, 8 April 2006, 08:25 GMT 09:25 UK
Hamas condemns 'hasty' aid cuts
Palestinian Prime Minister Ismail Haniya
Mr Haniya said his government faces a deep financial crisis
The Palestinians' new Hamas prime minister, Ismail Haniya, has attacked the European Union and United States for cutting direct financial aid.

He said the move, taken in protest at Hamas' hardline position on Israel, was "hasty and unjust" and would not serve the interests of the Middle East.

The EU and US are calling on Hamas to recognise Israel, renounce violence and accept past peace agreements.

Palestinian leader Mahmoud Abbas said the aid cut would hit ordinary people.

The Palestinian Authority (PA) has received about $600m (500m euros; 340m) a year in aid from the EU since its foundation in 1994, with another $400m coming from the US.

The European Commission said on Friday it was suspending direct aid to the PA, with some $36.9m (30m euros; 21m) at stake in the immediate future.

Washington said it would suspend or cancel its projects though it would boost humanitarian aid to Palestinians through United Nations aid agencies.

Behind Mr Haniya's bravado, he and his ministers are deeply worried, the BBC's Caroline Hawley reports from Gaza City.

The new Palestinian government does not have the money to pay the salaries of its civil servants - it is broke and in debt, our correspondent says.

Officials say they will seek urgent help from Arab and Islamic countries.

'Everyone punished'

Referring to his group's election victory in January, Mr Haniya said "the world should respect the choice of the Palestinian people".

"These decisions were hasty and unjust," he remarked after meeting Mr Abbas, the Palestinian president whose allies lost the election.

Mr Abbas said the Palestinian people "should not be punished for their democratic choice".

By cutting aid, the EU and US were "punishing all the people, workers and families", he added.

The suspension of EU money covers all direct aid to the government and payment of public employees' salaries with EU funds through the World Bank.

But it does not affect humanitarian aid sent to non-governmental organisations or to United Nations relief agencies.

EU foreign ministers are due to meet next week to discuss what to do about future aid.

US Secretary of State Condoleezza Rice said Hamas had refused to accept "principles of non-violence, recognition of Israel and respect of previous agreements between the parties".

The group "must take responsibility for the consequences of its policies", she added.

But US aid channelled through agencies not linked to the government would go up by 57% in 2006 to $245m (140m) and another $42m would go to supporting civil society and independent institutions.

1: Distributed through World Bank $85m
2: For Isr/Pal integration $12m
3: For UN relief (UNRWA) $77m
4: Food aid $35m
5: Humanitarian aid $33m
6: Special projects $24m
7: Infrastructure $72m
8: Other donations by member states $262m

EU TOTAL: $600m
1: Unused funds from 2003/04 financial year $175m
2: To pay PA debts $20m
3: Spending on new Gaza infrastructure $50m
4: USAID projects $155m

US TOTAL: $400m
Sources: EU, US

Hear more on the consequences of the aid cut

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