Clinton says no U.S. funds will go to Hamas

By Sue Pleming

SHARM EL-SHEIKH, Egypt (Reuters) – Secretary of State Hillary Clinton took a hard line against the Islamist Hamas group on Monday and said $900 million in U.S. aid for the Palestinians was part of a broader bid for Arab-Israeli peace.

Clinton maintained the former Bush administration's anti-Hamas rhetoric and said no money would go to the militant group Washington says which must recognize Israel, renounce violence and sign up to past Israeli and Palestinian agreements.

"We have worked with the Palestinian Authority to install safeguards that will ensure our funding is only used where and for whom it is intended and does not end up in the wrong hands," she said. Washington labels Hamas a terrorist organization.

But, in her first foray into Middle East peacemaking, she also made clear President Barack Obama was committed to pursuing an Arab-Israeli peace and the aid package -- about a third of it for Gaza -- was aimed at accelerating those efforts.

"Our response to today's crisis in Gaza cannot be separated from our broader efforts to achieve a comprehensive peace," Clinton told a donors' conference in Egypt held to help the Palestinian economy and rebuild Gaza after an Israeli offensive.

"Only by acting now can we turn this crisis into an opportunity that moves us closer to our shared goals."

Clinton will go to Israel and the West Bank where the U.S. special envoy to the Middle East for the Obama administration, George Mitchell, has been speaking to both sides to assess options for restarting peace talks.

"We will vigorously pursue a two-state solution to the Israeli-Palestinian conflict," said Clinton, whose husband, President Bill Clinton, failed to secure an elusive peace deal.

However, despite the talk about pushing for peace, when asked if he saw any major shift from the former Bush administration's Middle East polices, Egypt's Foreign Minister Ahmed Aboul Gheit, replied: "No, I do not think (so)."

It was Clinton's first major international forum in her new job and she had back-to-back meetings with top officials from Saudi Arabia, Bahrain, Egypt, the United Arab Emirates, Italy, and others. She also shook hands with Syria's foreign minister and chatted for a few minutes.

European diplomats have urged Clinton to press the Israelis to ease restrictions on the border crossings into Gaza, saying the aid will make no difference unless it can get through.

"She will go to Israel and she will certainly make the case that we have been making," said European Union External Relations Commissioner Benita Ferrero-Waldner after seeing Clinton along with the quartet of Middle East peacemakers.

QUARTET

No statement was released after the meeting of the quartet, comprising the United States, Russia, the United Nations and EU.

But a senior European diplomat said some European countries were looking at how they could be "more flexible" in dealing with a future Palestinian government that could include Hamas, which won a Palestinian election in 2006.

Palestinian factions are holding talks to try to end the schism between the Hamas-ruled Gaza Strip and the occupied West Bank where President Mahmoud Abbas' Fatah holds sway, but Clinton said the Western-backed Palestinian Authority of Abbas offered a more peaceful future.

"Not the violence and false choices of extremists whose tactics including rocket attacks that continue to this day, only will lead to more hardship and suffering," she said, in reference to rockets fired by Hamas into the Jewish state.

"For the Palestinians, it means that it is time to break the cycle of rejection and resistance and to cut the strings pulled by those who exploit the suffering of innocent people."

Of the more than $900 million in U.S. funding, which has to be agreed by Congress, $300 million was earmarked to provide humanitarian aid for Gaza after Israel's offensive in December, launched with the stated aim of stopping the rocket attacks.

A goal of the U.S. aid is to shore up the Abbas government.

About $200 million of the U.S. package will help cover budget shortfalls, with $400 million for economic reform and private sector and other projects on the West Bank.

Israeli politicians are also seeking to form a new government and Clinton -- in apparent reference to hawkish prime minister-designate Benjamin Netanyahu -- said Israelis needed to show the Palestinians that there were benefits to negotiating.