The US is cautiously supporting the new European mechanism for providing financial aid to the Palestinians while bypassing the Hamas government.
Secretary of State Condoleezza Rice said Friday that the European proposal brought the international community closer to solving the problem of funding the Palestinian Authority.
"I think we are close to substantial agreement on it. It's still - there is some more work to do within the Quartet, but I believe that we will come to a solution. And it is important to have a way for donors to address the needs of the Palestinian people without contributing to the Hamas government," Rice said after a meeting with her Italian counterpart Massimo D'Alema in Washington.
The plan to bypass Hamas drew condemnation from the Palestinian government.
Palestinian Information Minister Youssef Rizka claimed the Europeans had bowed to American pressure and adopted a "hostile policy" that aimed to divide Palestinians by selecting who would get aid. "This is regrettable," Rizka - a member of Hamas - complained.
Israel said it wanted to get more details from the EU this week. But Foreign Ministry spokesman Mark Regev said: "Israel has consistently supported the international community's direct support for the Palestinian people, support that will bypass the Hamas government." The European proposal, drafted Friday in Brussels, calls for the provision of 100 million euros to the Palestinians via three separate channels.
The first would distribute funds through existing health programs operated by the World Bank. This funding includes not only cash and equipment for hospitals and clinics but also funding payment for health care providers.
The EU made it clear that these payments are "social allowances", not "salaries" which will be given directly to the workers, not through the Palestinian Authority. Employees of the PA haven't received their salaries since Hamas won the elections in February and international funding was halted.
The US has opposed the payments of salaries for employees of the Palestinian Authority and sited anti-terror laws that prohibit banks from transferring funds to groups and individuals that are involved in terror activity.
The second part of the assistance to the PA will go through the European Commission's emergency relief plan and will be used for providing essential needs such as fuel for the Palestinians.
The third channel of funding proposed by the Europeans will be used to provide direct financial assistance to individuals in need within the Palestinian territories. The EU did not yet detail the way in which those individuals would be identified and the process of transferring the money to them.
"In order to achieve an immediate impact, the mechanism will focus on essential supplies and running costs for social services and health, supply of utilities including fuel, and social allowances," the statement issued by the EU leaders reads.
The idea of forming a new mechanism was raised by the Quartet last month following reports of a possible financial and humanitarian crisis in the PA due to the lack of international funds. The guiding rule of the mechanism is to allow funds to reach the Palestinians without having them go through the Hamas bureaucracy.
The proposal still needs to be approved by the Quartet, comprised of representatives of the EU, US, UN and Russia. It is not expected to undergo major changes, since the details of the proposal were already discussed in recent weeks between US and European representatives.
State Department spokesman Sean McCormack described Friday the resolution reached in Brussels as a positive step. "We've made, we believe, quite a bit of progress in talking to the EU about their proposal. And we think that... it does show some promise".
McCormack would not get into the issue of US participation in the international effort to fund the PA and said that it is still premature to discuss this issue.
The EU is the single largest donor for the PA and it provided almost 500 million euros a year before Hamas came to power.
AP contributed to this report.