US 'to slash funding for Abbas'

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The United States is to slash funds for Palestinian leader Mahmoud Abbas' security forces, amid fears the money could end up with Hamas.

US officials said about $36m (£18m; 27m euros) would be cut from a proposed $86m package.

The announcement comes a day after the US held its first meeting with a member of the new Palestinian coalition.

The US says it will boycott members of the government who belong to Hamas, which it regards as a terrorist group.

Meanwhile the so-called Quartet of Middle East peace mediators - the US, UN, EU and Russia - have overcome differences over how to respond to the new Palestinian government.

In a statement, the group reaffirmed that an international aid embargo would remain in place until the government recognised Israel, renounced violence and adhered to past accords.

It said the government would be judged by its actions, not just its composition.

The unity government - bringing Hamas' rival Fatah and other parties into a coalition - was formed last week after Western powers refused to deal with the previous government of Hamas.

New 'challenge'

US Secretary of State Condoleezza Rice told a congressional committee the funds would be cut from an aid package meant for Mr Abbas' National Security Forces.

Some of the money that I would have requested I did not think I could fully account for Condoleezza RiceUS secretary of state The revised plan, she said, "will request less money, precisely because some of the money that I would have requested I did not think I could fully account for," Reuters news agency reported.

The BBC's Jonathan Beale in Washington says the move is a sign of America's nervousness at the power-sharing deal between Hamas and the more moderate Fatah movement.

The National Security Forces are one of about 12 Palestinian security forces, some of which are loyal to Hamas.

Ms Rice said the formation of the new coalition government was "something of a challenge" for the US.

Washington had previously refused to deal with the Hamas-led Palestinian Authority (PA) since the militant group came to power in elections in January last year.

It has said, however, that it will engage with non-Hamas members of the coalition.

Funding 'up'

On Wednesday, the US consul general in Jerusalem, Jacob Walles, met Palestinian Finance Minister Salam Fayyad, an independent, in the West Bank town of Ramallah.

Mr Fayyad also met EU Middle East envoy Marc Otte in the town the same day.

Despite the sanctions against the PA, international aid to the Palestinians grew in 2006, the UN said.

Last year Palestinians received more than $1.2bn, compared to $1bn in 2005, according to the Office for the Co-ordination of Humanitarian Affairs (OCHA), the Associated Press news agency reported.

Much of it was channelled to humanitarian projects, bypassing the Hamas government, AP said.

The EU contributed about $930m - an increase of more than 30% on 2005 - while emergency aid also came from the UN and the Arab world, the news agency said.