The European Union on Friday threatened to cut off aid to a Hamas-led Palestinian government "unless it seeks peace by peaceful means" in its strongest signal on the issue to date. Hamas, which won the Jan. 25 parliamentary elections, must recognize Israel, renounce violence and endorse all agreements previous Palestinian leaders have signed with Israel, EU External Relations Commissioner Benita Ferrero-Waldner said. "We want to remain a reliable partner for the Palestinian people, but we will not go soft on our principles," Ferrero-Waldner said. "Money will not flow to the new (Palestinian) authority unless it seeks peace by peaceful means." But she said the EU needs to give Hamas time to abandon its strident anti-Israel views so European assistance can continue to ease the economic plight of the Palestinian people. EU officials said privately that one way for Hamas to do so was to endorse a 2002 peace initiative of Arab nations that includes a recognition of Israel's right to exist. Ferrero-Waldner spoke at the outset of two days of informal talks by EU foreign ministers. They grappled with the question of how Europe can remain the largest donor for the Palestinians without any of their aid ending up in the till of a government led by a faction both the United States and the EU consider a terrorist organization. EU foreign policy and security affairs chief Javier Solana presented the 25 EU foreign ministers with an update of current aid programs that he and Ferrero-Waldner wrote. The paper offered no funding options, nor a recommendation for an immediate cut off of EU aid to the Palestinians. In 2005, EU governments and the EU executive commission together gave about â‚¬500 million (US$600 million) to the Palestinian Authority. Before the EU foreign ministers meeting, a Foreign Office spokesman in London said Britain was not prepared to fund or deal with terrorists, but added that the Palestinian people should not be punished. The United States has already ruled out money for the Hamas government and is considering continued financing without money going into Hamas' pockets.