WASHINGTON – The US sped up delivery of $150 million in direct aid to the Palestinian Authority Wednesday, citing the need to fill an urgent budget shortfall.

“This figure underscores the strong determination of the American people and this administration to stand with our Palestinian friends even during difficult economic times,” declared US Secretary of State Hillary Clinton in announcing the aid, which was taken from the $200 million the Obama administration plans to allocate to the PA in 2011.

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“We need to work with the Palestinian Authority to support their efforts to build toward a future Palestinian state that is able to govern itself, uphold its responsibilities to provide for its own people, and ensure security,” Clinton said at the State Department Wednesday, with PA Prime Minister Salam Fayyad participating by video conference.

“Progress on this second track gives confidence to negotiators, removes excuses for delay and underscores that the Palestinian Authority has become a credible partner for peace.”

Senior administration officials pointed to a year-end shortfall in the Palestinian Authority’s budget as the driving factor behind the timing of Wednesday’s announcement.

“Given the significant budget gap that the Palestinian Authority faced, we were looking… to do all that we could to close their budget gap for this year,” one official said, noting that the EU and some Arab states have also recently made allocations.

“We obviously wanted a number of things here, including encouraging others to do more as well on the funding.”

But the move also comes as negotiations between Israelis and Palestinians have faltered, with Israel refusing to extend a settlement freeze the PA wants reinstated and the Palestinians threatening to go to the UN for a unilateral declaration of statehood.

The US has already offered a package of incentives to Israel, including security and diplomatic guarantees, in exchange for a freeze extension, but Prime Minister Binyamin Netanyahu has so far declined to take it.

A US official characterized Wednesday’s announcement as in keeping with a two-track approach which emphasizes the importance of progress in negotiations on the one hand, while on the other improving the situation for Palestinians on the ground.

“We are also committed to helping build institutions of the Palestinian government so that should there be an agreement down the road that leads to a Palestinian state, they’re ready to govern, so these are not mutually exclusive,” he said. “But obviously it underscores our firm commitment to help the Palestinian people even as we continue to press the parties to resume negotiations.”

Clinton is set to meet with Netanyahu during a one-on-one meeting in New York Thursday morning in which these and other issues related to the peace process are expected to arise.

The transfer of aid comes as control of the US House of Representatives, where spending bills originate, is set to shift from Democrats to Republicans.

Several incoming Republicans, including some in charge of key committees, have indicated that they will take a skeptical view or even oppose aid to the Palestinians – which could complicate administration efforts.

A senior US official indicated that the administration hopes Congress can be convinced of the merit of Palestinian aid as a tool for advancing the peace process, citing its role in improving security and the economy in the West Bank.

“That’s the kind of action that, in turn, gives confidence to the Israelis that they have a capable partner, and that helps to promote the peace process,” he said. “So we think that this is a case we have successfully made to Congress in the past, and that we will make that case again.”

For several years of the previous Bush administration, US officials and members of Congress were wary of giving money to the PA for fear it would be mismanaged, but those payments resumed once Fayyad, a Western-trained economist, took control of the funds.

The $150 million brings direct US budgetary funding to the Palestinians for 2010 to $225 million, while bringing total spending for Palestinians – including US security assistance and aid to the United Nations Relief and Works Agency – to nearly $600 million. US officials said that was roughly the same as last year’s total.

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