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Us plans direct aid palestinian authority { July 9 2003 }

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U.S. Plans To Provide Direct Aid to Palestinians
Policy Shift Aims to Bolster Abbas and Counter Hamas

By Glenn Kessler
Washington Post Staff Writer
Wednesday, July 9, 2003; Page A01

The White House has decided to provide direct funding to the Palestinian Authority for social service projects, Bush administration and congressional officials said yesterday. The decision marks an important shift in U.S. policy designed to bolster the new Palestinian prime minister and offer a counterweight to services provided by militant organizations such as Hamas.

The initial funding is relatively small -- $20 million -- but its symbolic value is much greater. In the past, successive administrations and congressional restrictions had limited aid to the Palestinians to indirect channels, such as the United Nations or nongovernmental organizations (NGOs). President Bush will claim a waiver from congressional restrictions, officials said.

The move represents a deepening commitment by the administration to the peace process launched by the president last month, as well as a major investment in Mahmoud Abbas, the Palestinian prime minister. But it comes amid new strains in the Palestinian leadership that threaten to derail the peace process. Abbas yesterday resigned from the central committee of Fatah, the largest Palestinian political movement, in a dispute over relations with Israel, while a Palestinian group that agreed last week to a three-month cease-fire claimed responsibility for a bombing that killed an Israeli woman on Monday.

Administration officials, in briefing congressional leaders about the aid decision, stressed the urgency of the action, saying they want to get the funds to the Palestinian Authority as quickly as possible to shore up Abbas as he tries to establish his credibility with the Palestinian people. The push for direct aid accelerated after the recent trip to the region by national security adviser Condoleezza Rice, during which Palestinian Finance Minister Salam Fayyad made an impassioned plea to Rice for direct assistance.

"It is very significant. This is the first time since the Palestinian Authority was established in 1994 that the United States has given direct assistance," said Edward G. Abington, a Washington-based consultant to the Palestinians. "It puts them on a different footing in how we are dealing with them, opening the door wider in terms of dealing with them as a government."

Hamas, formally known as the Islamic Resistance Movement, has claimed responsibility for suicide attacks against Israelis but has also won affection within the Palestinian community in the Gaza Strip by providing schooling and social services. The Israel Defense Force recently turned over portions of Gaza to the Palestinian security services, and the administration hopes the direct aid will demonstrate that Abbas's leadership can make a difference.

Though there is deep support for Israel on Capitol Hill, congressional officials said the administration has worked hard to ensure that there would be little opposition among Israel's traditional supporters in Congress and among Jewish groups. "They knew that if they were not careful they would not get this pot of money next year," one congressional aide said.

"We feel Palestinian prosperity is essential to Israeli security," one pro-Israel lobbyist said. "Our only concern is that the money is not directed to terror."

The administration has made a good case for the direct aid, a senior Republican Senate aide said. "People are going to watch it carefully to see what happens," he added. "It could help the peace process and polish the image of the Palestinian Authority. Conversely, it could be a disaster."

In the fiscal year ending in September, the United States plans to provide about $95 million in aid to a United Nations agency that assists Palestinian refugees and $125 million to NGOs working with the Palestinian Authority. Congressional officials differed yesterday on whether the $20 million would come out of the existing funds, representing no net gain for the Palestinians, or whether it would come from $200 million in previously allocated funds that have never been delivered to the Palestinians.

Though the administration has placed great hopes in Abbas, the Palestinian Authority is still led by Yasser Arafat, the longtime leader who has been scorned by the administration and by the government of Israeli Prime Minister Ariel Sharon over his links to terrorism and corruption.

Bush last year cut off administration contacts with Arafat and refused to deal with him, demanding that the Palestinians select a more moderate figure. Arafat reluctantly agreed to create the new post of prime minister, and his longtime aide Abbas was confirmed in the post in April.

Officials said the money would be given directly to the Palestinian Finance Ministry. Fayyad, a former official at the International Monetary Fund, has impressed officials in Washington and in Israel with a series of reforms he has instituted in the past year to provide greater accountability in how the Palestinian Authority disburses its funds. A team of accountants from Deloitte & Touche works in the finance ministry to keep an eye on Palestinian accounts.

"The tragedy of the 1990s is that billions of dollars in aid was not spent effectively or went to overseas bank accounts," a Democratic Senate aide said. Fayyad told congressional leaders in December that the "money had been stolen from the Palestinian people, and he wants to restore it," the aide said.

2003 The Washington Post Company

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