A growing number of European Parliament members are demanding the European Union recognize the Palestinian unity government and resume direct financial aid payments frozen more than a year ago. Their opposition to the EU boycott, imposed after last year's election victory by Hamas, is driven by concern that the aid cutoff has been counterproductive - failing to persuade Hamas to moderate, while contributing to the turmoil as rival Palestinian factions clash in the streets. "If we don't end the boycott the region will descend into civil war and al-Qaida-type terrorist groups will emerge," Belgian Socialist lawmaker Veronique De Keyser said ahead of a Wednesday parliamentary debate with the EU's foreign policy chief Javier Solana on the situation in the region. "The only solution is to recognize the government that was legitimately elected - and talk with all of its members," she said. She is among a large group of EU parliamentarians - as many as 250 in the 785-member house, according to some lawmakers - who would like to see the EU's 27 member states radically change their policy toward the Palestinians. So far, the EU's 27 national governments and the bloc's executive body, the European Commission, have refused to change their policy, insisting that any Palestinian government must recognize Israel, accept previous agreements with Israel and renounce violence. Even with the Fatah movement now in a unity government with Hamas, many Western governments have limited their dealings to the new members of the Palestinian Cabinet, which are perceived as more moderate. Despite the growing calls in the EU Parliament, an early end of the boycott is not in sight - but how to proceed is an issue that is being intensely fought over, according to one senior EU diplomat. The EU's policy toward the Middle East is determined solely by its national governments, and the European Parliament has no decision-making powers in this area. But debates in the EU legislature - the only directly elected EU institution - are an important reflection of the political mood in the member states, and voices advocating a policy change toward the Palestinians are an undercurrent some say is likely to grow if the situation deteriorates further. During the aid cutoff, the EU has channeled hundreds of millions of euros in social assistance to the Palestinians through a program that bypasses the government. A new PLO account - managed by Finance Minister Salam Fayyad - has also been set up. EU foreign ministers are expected to discuss a proposal to shift EU aid to the new PLO fund at their meeting in Luxembourg June 18. Because Hamas is not part of the PLO, the new account would give the EU a mechanism for resuming payments - and considerably boosting the Palestinian public finances - without going through Hamas. "We are discussing with Minister Fayyad the different possibilities that are there in order to have the transparency and the accountability for the money that could be transferred to that account," Swedish Foreign Minister Carl Bildt said earlier this week after a meeting with his Palestinian counterpart, Ziad Abu Amr. But some EU parliamentarians want a more dramatic shift. In a break with EU policy, several EU parliamentarians met Palestinian Prime Minister Ismail Haniyeh of Hamas in Gaza City in May, in the first meeting between a European delegation and the Hamas leader since the Islamic group came to political power last year. The Socialist group, which holds 218 seats in the EU assembly, wants to ensure a political resolution that is being prepared for a vote later this month includes a call for the recognition of the government and an immediate release of more funds to the Palestinians. Such resolutions are often issued to pressure EU member states and the executive European Commission. "Of course we are concerned about the violence and we do mind that Hamas hasn't recognized Israel ... but we consider the EU's current approach totally wrong," said Dimitris Komodromos, spokesman for the Socialist group, adding that the EU "needs to give more money." "The survival of this government is the only hope for bringing the situation back under control," he said. While some traditionally pro-Arab nations, such as France and Belgium, have suggested the government of national unity would be encouraged by renewed contacts with the EU, countries such as Britain or the Czech Republic refuse to budge until Hamas meets the demands on ending violence and recognizing Israel's right to exist. "The idea that the government has somehow fulfilled the EU's demands is phantasmagoric," said Jana Hybaskova, a Czech European lawmaker of the European People's Party and European Democrats, the parliament's largest political group.