The US won't deal with Hamas ministers in a future Palestinian Authority government, but will also not cut off ties with the PA as a result of Hamas's inclusion, diplomatic officials said Monday. According to the officials, the US formula for dealing with a PA government following Wednesday's elections would be based on the "Lebanese model." In Lebanon, the officials said, the US continues to have strong ties with the government in Beirut even though Hizbullah is part of it. It does not, however, have any contact with the one Hizbullah minister. The officials said that since Hamas was on the US list of terrorist organizations, the US would be legally proscribed from having contact or dealing with Hamas officials, even if they were PA ministers. At the same time, they said, the law would not necessarily proscribe the US from continuing to deal with the PA or contributing money to it. These comments came as Israeli diplomats were quietly holding conversations with their counterparts in Europe and the US over the steps they should take if Hamas became the dominant force inside the PA. The US Congress passed a resolution late last year condemning Hamas's participation in the election, and warning that financial assistance to the PA could be blocked if Hamas's terrorist infrastructure was not dismantled. The EU has also indicated that a Hamas victory could jeopardize its financial support for the PA, with foreign policy chief Javier Solana even saying during a visit in December that EU taxpayers would not want to support a PA government supporting terrorism and Israel's destruction. The EU has also enshrined in two key agreements with the PA a renunciation of terrorism and commitment to the peace process and road map, and Israeli officials are holding discussions with European counterparts to see how these clauses could be implemented. Both the Quartet - the US, EU, Russia and UN - and the EU's foreign ministers are scheduled to meet separately soon after the PA elections and discuss the results and their ramifications, and Israel is also waiting, diplomatic officials said, to see the results before lobbying for any specific statement from either body. Indeed, inside Israel's policy-making forums there are differences of opinion regarding the best course of action to take in the long term toward Hamas participation in the PA governing institutions. The main differences, according to a senior diplomatic source, revolved around what was the more likely scenario following a strong Hamas showing. One school of thought, reflected by Prime Minister Ariel Sharon's adviser Dov Weisglass and much of the defense establishment, maintains that a strong Hamas showing would lead to a new round of terrorism, as Syria and Iran would use Hamas's new-found legitimacy to continue encouraging terrorism. Another school, led by National Security Council head Giora Eiland, argues that a strong Hamas showing would lead to the moderation of at least some elements of Hamas, and that Israel should not rule out dealing with those elements at some point. It is the conflict between these two approaches that led Acting Prime Minister Ehud Olmert on Sunday to ask both the National Security Council and a blue-ribbon government team headed by Weisglass to present him with possible scenarios and policy recommendations following the elections. Meanwhile, Robert Satloff, executive director of the Washington Institute for Near East Policy, said at the Herzliya Conference Monday that Israel's muddled policy on Hamas was partly responsible for its already having gained political legitimacy through the election process. He said this contradictory policy had cost it a "great diplomatic opportunity" to stand firm and prevent Hamas's participation in the elections in the West Bank. Years ago the Americans and the Israelis demanded that to talk to the PLO, the organization had to recognize both UN Security Council Resolution 242 - Israel's right to exist - and renounce terrorism. Today, he said, the world legitimizes Hamas without demanding from it what was demanded from the PLO a quarter-century ago. "There are those who believe that the organization is mellowing, that it is shedding its original mission," he said. "There are those who even say that Hamas holds the key to the eventual settlement of the conflict. Accept this analysis at your peril," Satloff warned against mistaking tactical flexibility for strategic change, and said Hamas would have no trouble talking with Israel, out of the belief that it could negotiate Israel out of existence. Foreign Minister Tzipi Livni told the conference that since the international community viewed the PA elections as a way for the PA to gain the legitimacy it needed to dismantle the terrorist organizations, Israel must work with the international community after the elections to ensure that this is done. Meanwhile, former US president Jimmy Carter, speaking at the Herzliya Conference on Monday, urged Palestinian Authority Chairman Mahmoud Abbas on Monday to stamp out terror, and told Israel it should withdraw from more West Bank settlements. "[Violence] is inherently counterproductive for the well-being of the Palestinian people and obviously prevents any further progress in the peace process," said Carter, who is here to help monitor Wednesday's Palestinian legislative elections. Carter called on the Palestinian Authority "to take every possible effort, even including a direct military confrontation, to control those within the Palestinian community who advocate terrorism or violence as a weapon to be used." Carter also said the disengagement from Gaza was not enough. "You can't have a Palestinian state living in peace and dignity if [the West Bank is] filled with Israeli settlements," he reasoned, adding that it was "reasonable" for Israel to retain settlements near its pre-1967 border. Later, in an interview with Channel 2, Carter said Israel's intention to draw its own borders unilaterally if it is unable to negotiate a deal with the Palestinians could be acceptable "if the borders don't intrude too deeply into the West Bank." He said a role in Palestinian government could lead Hamas to "moderate their position and remove their commitment to terrorism and induce them to recognize Israel's right to exist and to exist in peace." s president, Carter presided over the negotiations that led Israel and Egypt to sign a peace treaty in 1979. AP contributed to this report.