The new Palestinian Authority government will need 1 billion euros in international aid this year to "get back on our feet," Palestinian Authority Finance Minister Salaam Fayad said Wednesday. Fayad won an offer of technical assistance for his ministry from the EU. But the bloc's External Relations Commissioner, Benita Ferrero-Waldner, restated the EU position - Hamas which forms part of the government, must recognize Israel and commit to respecting past agreements before direct payments to the government can resume. "I made it clear that possible reengagement does not mean resuming payments overnight," Ferrero-Waldner said. Fayad said the Palestinian Authority was operating on only a quarter of the funds it needed to provide basic services to the population. "We are facing an acute financial crisis," he told reporters after meeting with Ferrero-Waldner. "We are looking for donor support to bridge the gap of 1 billion euros for 2007," Fayyad said. "This is assistance we need to get back on our feet." It was Fayad's first comment on the issue since Hamas and the moderate Fatah Party formed a national unity Cabinet last month. Fayad, who belongs to a small moderate party, said he expected most of the assistance to come from Arab nations and the European Union. "We hope to get support to enable us to function," the minister said, adding that the international boycott had "devastated" the Palestinian economy. But Fayad also said he expected the economy to become "self-sustaining as soon as Israel abolishes restrictions on access" to Palestinian territories, and that international assistance would then become unnecessary. Since the Palestinian election, the EU has bypassed the government and paid hundreds of millions of euros in social assistance through the so-called Temporary International Mechanism (TIM). Ferrero-Waldner said the system - which currently provides assistance to roughly a quarter of the Palestinian population - would remain in place for the time being. She offered EU assistance to Fayad's Finance Ministry, whose reform is seen as a key condition for the resumption of international aid, saying the EU could provide expert technical advice in areas such as auditing. The European Union, along with the other members of the Quartet of Mideast peace negotiators - the United States, Russia and the United Nations - has said it will deal with moderates within the Palestinian Authority while continuing to shun ministers belonging to Hamas. "We are also looking at the actions and words of the different ministers," she said. "There is some progress and we will have to look at it very, very carefully." Fayad responded by noting that the government was a single team and that it had already embraced all agreements with Israel signed by previous Palestinian governments. Israel has refused to cooperate with the new government until Hamas fulfills all international conditions. But EU officials expect the foreign ministers of the Quartet to meet soon - possibly in Egypt - to discuss how to re-engage with the Palestinian Authority.