ARAB EUROPEAN RELATIONS - Feb 12 - PA Given Hope Of EU Aid.

One of the EU's top officials holds out the prospect of resuming aid to the PA in the wake of last week's agreement by Fatah and Hamas to form a national unity government. The 27-nation bloc has frozen direct aid to the PA since Hamas won parliamentary elections last year, but Benita Ferrero-Waldner, external relations Commissioner, suggested the Fatah-Hamas deal could transform the situation. The EU is the biggest donor to the Palestinians, in an effort spearheaded by the European Commission. Last year, the EU delivered about 700m ($907m, [pounds sterling]466m) in aid to the Palestinians, but bypassed the PA itself after Hamas won power. "When it becomes possible to re-engage with a national unity government we could then hopefully resume support to the PA, ministers and ministries and agencies from which we have had to distance ourselves in the last year", she said. Although officials from EU member states indicated that Ms Ferrero-Waldner's comments were premature, her statement highlights a growing divergence between the EU and the US and Israel. The EU has consistently been more enthusiastic than the US about a national unity government with which it can do business, while Washington has found it much more difficult to express support for the formation of any government with Hamas members. Privately, EU officials often say the bloc will need to talk to Hamas eventually and that it is unrealistic to demand that a new government explicitly recognise Israel. However, principles agreed by the "Quartet" of the EU, the US, the UN and Russia in the wake of Hamas's victory explicitly demand that Palestinian leaders recognise Israel, as well as abiding by past agreements and renouncing violence. Although last week's Mecca agreement to form a national unity government addresses the last two points, it does not require that the new administration recognise Israel in any way. Ms Ferrero-Waldner's latest proposals follow a Quartet declaration this month that calls for "international support in the areas of [Palestinian] governance, institution building and economic development". Jerusalem's Jewish mayor has moved to defuse a Muslim furore over construction work at Islam's third holiest site by ordering a public review that will consider objections before building begins, reports Harvey Morris in Jerusalem. More than 30 police and Muslim worshippers were injured on Friday when Israeli security forces confronted protesters inside the al-Aqsa mosque complex that Jews also revere as the site of their second Temple. Amid further protests in the West Bank at the weekend, it was not clear whether Uri Lupolianski's concession would be enough to cool Palestinian tempers. His office said work would continue on clearing the remains of an ancient bridge that links the Jewish Western Wall plaza to the Muslim sanctuary. Israeli archeologists would in the meantime continue a dig at the site to safeguard any historical remains.