Following Hamas Takeover of P.a., West and Israel Cut off Contact, Funds

Now that Hamas officially has become the face of the Palestinian Authority, the West and Israel can’t slam the door fast enough. Palestinians who elected the terrorist group in January felt the bite of that decision within days of Hamas’ assumption of power last week. All Hamas leaders, and officials associated with the terrorist group, were officially off-limits to U.S. diplomats by week’s end.

With a couple of exceptions, the same was true of Europe, where Hamas also is listed as a terrorist organization. Israel already had suspended relations with the Palestinian Authority.

Western diplomats said the clampdown was inevitable, given Hamas’ refusal to renounce terrorism and recognize Israel. But they also were scrambling to find ways to keep a line open to the Palestinian public.

“We are in a situation in which you have a government led by a party that we, the United States, consider to be a terrorist group,” David Welch, the top U.S. State Department envoy to the Middle East, said last week in a roundtable interview with Arab journalists. “It’s going to introduce a fundamentally difficult effort, fundamentally difficult problem, in the effort to get to peace negotiations.”

Ehud Olmert, who was elected Israeli prime minister last month, says he remains committed to negotiating peace with Mahmoud Abbas, the relatively moderate P.A. president from the Fatah Party. The Bush administration is encouraging Israel to sustain ties.

Welch and Elliott Abrams, the deputy national security adviser to the White House, met last week with their Israeli counterparts and encouraged them to continue seeking avenues to the Palestinians that would bypass Hamas. Dov Weisglass, Olmert’s national security adviser, has set up a team of top Israeli officials to explore such options.

Olmert’s commitment to negotiating with Abbas is relatively recent, however, and some analysts believe it is a formality, especially given Abbas’ weakness. Olmert says that if he can’t find a Palestinian partner, he will push ahead with unilateral withdrawals in the West Bank, as his predecessor, Ariel Sharon, did last year when he evacuated Israeli settlements in the Gaza Strip.

The diplomatic fallout from the Hamas takeover was predictable, but there were legal issues as well. The United States and Europe have suspended aid payments they maintained to the Palestinian Authority during the interim between Hamas’ victory on Jan. 25 and its ascension to power last week.

Another substantial blow came Tuesday when Bank Hapoalim, the principal Israeli bank dealing with the Palestinian Authority, shut down all ties, citing international legislation criminalizing dealings with terrorists.

The Bank Hapoalim decision could herald other private sector cutoffs for the Palestinians. Officials at the Arab Bank in Jordan, which handles some P.A. business, are considering their next move.

P.A. officials say they’re bankrupt, and that a fund-raising drive among Arab and Muslim nations hasn’t even come close to meeting the $250 million the authority pays in monthly salaries.

Israel fears that a total collapse of the Palestinian economy would destabilize its borders. Israel is endeavoring to come to an agreement with the Palestinians that would keep Palestinian markets open while preserving Israeli security needs.

Aid officials in the West Bank and Gaza Strip are shunning the Palestinian Authority, while wondering how to continue their programs without going through the P.A. infrastructure.

Even some programs that do not deal with the Palestinian Authority have suspended activities, said Larry Garber, director of U.S. Agency for International Development programs in the Palestinian areas from 1999-2004.

“There’s no formal policy that says ‘Let’s close down the programs,’ ” said Garber, who as director of the New Israel Fund maintains close ties with the aid community in the region. But some programs have been frozen, Garber said, because aid officials are worried that “they may be required to interact with P.A. officials down the line.”

The formal U.S. guidelines announced last Friday suggest the emerging Western consensus on how to deal with the Palestinians: Work with Abbas and the Palestine Liberation Organization, the precursor to the Palestinian Authority that is free from Hamas input.

“There should be no contacts between U.S. government officials and P.A. officials who are under the authority of the prime minister or any other minister in the Hamas-led government,” State Department spokesman Adam Ereli said. “They can have contact with Palestinian Authority President Abbas, officials in the office of the president, as well as officials and agencies directly under the authority of the Palestinian Authority president.”

That comports with a version of “The Palestinian Anti-Terrorism Act” currently circulating in the U.S. Senate, which bans all assistance to the Palestinian Authority but allows President Bush to maintain ties and financial support for Abbas and his office. The House version is tougher, but Capitol Hill insiders say the Senate version will probably prevail in conference.

Neither bill has reached the floor yet, but strong lobbying by the American Israel Public Affairs Committee has garnered co-sponsorship from over half the Senate and almost half of the 435 members of the House of Representatives.

Abbas appears more than eager to cut Hamas out of the negotiating loop, telling Israeli reporters in interviews that the PLO, which he chairs, is the only address for talks.

If Olmert really does negotiate with him, Abbas has pledged to bypass the Hamas-governed Palestinian Authority and take any peace deal directly to the Palestinians in a referendum. However, Abbas did not explain how that would work, given his inability to take steps such as dismantling Hamas’ terrorist infrastructure even when his Fatah Party was in power.

There was a sign from Hamas that it might be willing to defer to Abbas and the PLO. Writing in London’s Guardian last week, Ismail Haniyeh, the P.A. prime minister, called for the revival of the PLO. He said it was “essential so that it can resume its role in speaking for the Palestinians and presenting their case to the world.”