Saudi Arabia has unsuccessfully argued to the Bush administration that shutting off aid to the Palestinian government and isolating its new Hamas leaders will radicalize a destitute population and set back the cause of peace with Israel. "We are arguing the point, needless to say, with them strenuously," Prince Saud al-Faisal, Saudi Arabia's longtime foreign minister, told reporters Wednesday. "It is only through inclusion that you may change the position of Hamas." Prince Saud is in Washington for meetings with Secretary of State Condoleezza Rice and other US officials. He said he argued against cutting US and European aid to the Palestinian government at a meeting at the United Nations last week with Rice and other potential Middle East peacemakers. "We thought that was the wrong policy," Prince Saud said. Hamas, which refuses to renounce violence and has claimed responsibility for dozens of suicide bombings against Israel, is considered a terrorist organization by both the United States and the European Union. US law forbids direct contact with or financial support for Hamas. The United States has helped lead an international boycott of aid to the Palestinian government since Hamas' victory in elections in January. The squeeze has intensified since Hamas formed a Cabinet two months ago, and the group is now unable to pay government salaries or provide many basic services in the impoverished Palestinian territories. The previous secular Palestinian government relied on about $1 billion annually in overseas donations, out of a budget of $1.9 billion. "The Palestinians are living on such a subsistence level now, if you keep help away from them, where do they go?" Saud said. By denying aid, "You are not harming the government; you are only adding radicalism to the Palestinians," he said. "Instead of them calling on the government to support the peace process, they will be going the other way." Saudi Arabia contributes to the Palestinian cause through the Arab League, but more than $70 million in Arab League donations is now frozen because of US-supported banking restrictions. Iran also has pledged new support for Hamas. The United States, United Nations, European Union and Russia approved last week a still-vague plan to funnel new money to the Palestinians while bypassing the government. Saud said he is convinced Hamas can moderate, given time and dialogue. "If we don't talk to them, how do we convince them they should change their attitude toward peace?" he said.