Palestinian Authority officials expressed deep satisfaction on Saturday with what they said was a decision by the US and European Union not to stop financial aid to the Palestinians. According to the officials, Washington and some European countries have undergone a "major change" since Hamas's victory in last month's parliamentary elections, have clearly reversed earlier threats to halt aid to the PA and are now prepared to transfer funds. They expressed hope that other countries, which had issued similar threats, would follow suit. The officials told The Jerusalem Post that Washington and a number of European countries had promised to continue providing the Palestinians with humanitarian aid through international agencies. The pledge was made during meetings between US and EU officials with PA representatives over the past few days, the officials said. Israeli government officials denied there had been a change in the international community's approach to Hamas, with one diplomatic source noting that Israel had also said it wanted to see humanitarian aid to the Palestinian people continue. "Everyone wants to avoid a humanitarian crisis," the official said, saying that if there were such a crisis it "would be dropped on Israel's doorstep." This is the reason, he said, Israel had decided not cut off the supply of electricity and water to the PA. "Israel is in favor of humanitarian aid, but not direct government-to-government aid," the official said. "We have no objection to this aid going through the Red Cross, the World Bank or UNRWA, as long as it does not slip into the hands of a Hamas government." The issue of financial aid was at the core of talks held here on Saturday between Assistant US Secretary of State for Near East Affairs David Welch and PA Chairman Mahmoud Abbas. "The US position is very encouraging," said a top PA official. "Their rhetoric has changed and we're no longer hearing threats from Washington to punish the Palestinians because of the Hamas victory." Another official said at least four EU countries had pledged to continue financial aid to the Palestinians despite the results of the election. The meeting was the highest-level contact between the PA and the US since Hamas won a majority of seats in the Palestinian Legislative Council election. Chief PA negotiator Saeb Erekat said Abbas asked the US to continue its financial support to the Palestinian people and not to punish them for their democratic choice. "We asked the US administration to continue with its support and not to enforce collective punishment, which will have disastrous consequences," Erekat said. He said Welch talked about the difficulty which the Bush administration would face in asking Congress to continue financial support to the Palestinians after Hamas takes over. Erekat said the US never gave any money directly to the PA budget, but instead supported infrastructure projects through international agencies. He added that the PA would return to the US $60 million that was given to the Palestinians last year to finance several projects. Last week the Bush administration asked the PA to return the money for fear that Hamas would lay its hands on it. Welch said he discussed with Abbas the future of US- Palestinian relations and financial support. He said the US "will continue to be devoted to the humanitarian needs of the Palestinian people," but did not explain how that would interplay with its boycott of a Hamas-led cabinet. "In this critical time facing the Palestinian people, I reaffirmed our confidence in the program that [Abbas] had laid out before the PLC in his speech where he called for a negotiated two-state solution," Welch added. At the meeting, Abbas urged the US to exert pressure on Israel to halt its military operations in the West Bank and Gaza Strip, said one official. "President Abbas is very worried about the latest escalation," he said. "We hope Washington will intervene with Israel to calm the situation." Abbas also said the PA was prepared to resume final-status talks to discuss various issues such as the status of Jerusalem and the refugees. Welch is scheduled to meet on Sunday with Acting Prime Minister Ehud Olmert, Foreign Minister Tzipi Livni and Defense Minister Shaul Mofaz. Khaled Sulieman, a spokesman for Hamas's Change and Reform List, said it was evident that the US and EU had reversed their earlier threats to boycott the Palestinians financially. "We don't care whom they give the money to as long as it goes to the Palestinian budget," he said. "It doesn't matter if they send the money to Hamas or President Abbas as long as it's invested for the welfare of our people. What's important is that the money doesn't go the private bank accounts of some leaders." Amin Haddad, the former governor of the Palestinian Monetary Authority, said on Saturday that there was no reason why the PA should not accept financial aid from Iran. "There should be no legal problem if the money is transferred to the Palestinian Authority and not to a political faction," he said. In Brussels, diplomats said over the weekend that the EU was expected to approve the release of around $107,000 next week to help Abbas's caretaker administration, but would postpone a decision on further aid after Hamas takes power. Options the bloc's foreign ministers are considering include $48m. in new aid to help run utilities, such as power supply and waste collection, and authorizing the World Bank to unblock around $60m. to pay salaries of PA employees. The money is designed to keep the PA afloat after Israel's decision to withhold $50m. a month in tax funds. "The concept is to be able to help the Palestinian people, to be able to help the Palestinian Authority during this transition period," said EU spokeswoman Cristina Gallach, who declined to give details of what the ministers may decide Monday. EU officials said there would be no decision at Monday's meeting on funding to the Palestinians after a Hamas government takes power. "Later on we will evaluate what is the government doing, what the composition of the government is," Gallach said. "What we want is to help as much as possible the Palestinian president, the key interlocutor and somebody we have dealt with for a long time." Switching the flow of money away from the government to Abbas's office would reverse the position taken by the EU when Yasser Arafat headed the PA and the bloc preferred to use its funding to strengthen the government. Some European officials are wary of such a move because it could alienate Palestinians who voted overwhelmingly for Hamas against Abbas's Fatah movement. The EU and the US have said that funding to a Hamas-led government would depend on it recognizing Israel, renouncing violence and accepting the internationally-backed peace process. However, there is concern that the PA will collapse into chaos without international aid. Western diplomats are also worried that Iran could step in to fill a funding gap, further radicalizing the Palestinians reducing Western influence. The Quartet - the US, Russia, the UN and the EU - agreed last week to support the interim government until Hamas takes over. "We will continue to support the Palestinian Authority until the new government is formed and we have tried to find the necessary resources to do that," EU foreign policy chief Javier Solana said after a telephone conference call that included UN Secretary-General Kofi Annan, US Secretary of State Condoleezza Rice and Russian Foreign Minister Sergey Lavrov. "We hope that we will have enough money to sustain the Palestinian Authority at least until the new government is established," Solana told reporters. The EU is the biggest donor to the Palestinians, providing a total of $595m. a year. Most of that is channeled through UN assistance programs and NGO projects, but over $80m. from the EU's common budget last year was placed in a World Bank trust fund for direct payments to help the PA cover its day-to-day costs. Herb Keinon and AP contributed to this report.