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(photo credit: Associated Press [file])
The European Union agreed Monday to provide $143 million in urgent aid for Palestinians before a government takes office led by Hamas - a group the bloc considers a terrorist organization.
The funds were required to avoid "economic chaos" from paralyzing the Palestinian Authority, French Foreign Minister Philippe Douste-Blazy said.
Officials said the aid package comprises $48 million to pay for the Palestinian Authority's energy and other utility bills, $76 million for health and education projects and $21 million to help the authority pay its employees.
Diplomats in Brussels said over the weekend that the EU would postpone a decision on further aid after Hamas takes power.
The money is designed to keep the PA afloat after Israel's decision to withhold $50 million a month in tax funds.
"The concept is to be able to help the Palestinian people, to be able to help the Palestinian Authority during this transition period," said EU spokeswoman Cristina Gallach.
"Later on we will evaluate what is the government doing, what the composition of the government is," Gallach said. "What we want is to help as much as possible the Palestinian president, the key interlocutor and somebody we have dealt with for a long time."
The EU and the US have said that funding to a Hamas-led government would depend on it recognizing Israel, renouncing violence and accepting the internationally-backed peace process.
However, there is concern that the PA will collapse into chaos without international aid. Western diplomats are also worried that Iran could step in to fill a funding gap, further radicalizing the Palestinians reducing Western influence.
The Quartet - the US, Russia, the UN and the EU - agreed last week to support the interim government until Hamas takes over.
"We will continue to support the Palestinian Authority until the new government is formed and we have tried to find the necessary resources to do that," EU foreign policy chief Javier Solana said after a telephone conference call that included UN Secretary-General Kofi Annan, US Secretary of State Condoleezza Rice and Russian Foreign Minister Sergey Lavrov.
"We hope that we will have enough money to sustain the Palestinian Authority at least until the new government is established," Solana told reporters.
The EU is the biggest donor to the Palestinians, providing a total of $595 million a year. Most of that is channeled through UN assistance programs and NGO projects, but over $80 million from the EU's common budget last year was placed in a World Bank trust fund for direct payments to help the PA cover its day-to-day costs.
Herb Keinon and AP contributed to this report.