The Palestinian Authority returned $50 million in U.S. aid money immediately after the U.S. demanded the money returned on Friday.  After the U.S. Congress decided Wednesday to withhold $400 million a year of aid money from the Palestinian Authority, U.S. officials further demanded that $50 million that had already been given be returned. 
A recent report by the New York Times cited an Israeli internal government source as saying the U.S. and Israel were devising a plan to ‘starve Hamas out of power’.

update from:
U.S demands P.A to return $50 million in aid

2006-02-18 01:47:00

The U.S State Department said on Friday that the United States has asked the Palestinian Authority to return $50 million in aid, a move which the U.S explained as barring a Hamas-led government from receiving the money.

Sean McCormack, U.S State Department spokesman aid the Palestinian caretaker government headed by president Mahmoud Abbas had agreed to return money.

The fund was transferred to the P.A last year for infrastructure projects in the P.A areas after Israel’s withdrawal from Gaza and four settlements in the West Bank.

A new legislation was recently introduced to U.S congress members; the legislation calls for halting all U.S funding to organizations and departments related to the P.A.

US Cuts off Aid to Palestinians; Hamas seeks other sources
IMEMC & Agencies

The United State Congress voted this week to cut off aid money to the Palestinian Authority, aid money totalling about $400 million a year.  Hamas leaders shrugged off the aid withdrawal, launching a campaign to seek funding elsewhere.

US House Majority Leader John Boehner stated, "The responsibility of self-government has real consequences for both Hamas and the future of the Palestinian people. Until Hamas changes course – dismantles its terrorist organisation, and agrees to work towards a peaceful settlement with Israel – no taxpayer money should be provided to support the Palestinian government."  The U.S. government currently funds the Israeli government with $6 billion a year, but no consideration has been made to withdraw or cut the Israeli funding, despite the condemnation of current Israeli policies (including the military occupation of Palestinian land and the building of a Wall that annexes half of the remainder of Palestinian land) by the International Court of Justice and the United Nations.

Hamas leaders on Friday asked the US to remove the party from the US list of ‘terrorist organizations’.  The U.S. government  declared Hamas a terrorist organisation and pressured the European Union to do likewise.  Some within the European Union are hesitant to sever all ties with the now-democratically elected Hamas party leadership, now a majority in the Palestinian Parliament for the first time ever.

 Russia is planning talks later this month with Hamas leadership, talks which are supported by France and will likely be followed with Palestinian-South African talks as well.

The US has called upon Hamas to disarm and to recognise Israel. In response, Hamas’s senior leader Khalid Mishaal has publicly offered some concessions. He said that Hamas could agree to a "long-term truce" with Israel if it were willing to return to the 1967 borders and recognise the rights of Palestinians to self-determination."

Reacting to earlier demands by US President George W. Bush for the radical movement to end violence and recognise Israel, Hamas spokesman Mushir al-Masri said the Palestinian people were being "blackmailed".

Hamas has denounced most agreements between the Palestinian Authority and Israel, including last November’s deal on the re-opening under European Union surveillance of the Rafah border crossing between the Gaza Strip and Egypt, saying that the onus is on Israel to respect existing agreements.  Human rights groups have cited 24,000 violations of last year’s ‘ceasefire’ agreement by Israeli forces occupying Palestine, including the killing of 180 Palestinians.  In the same time period, Hamas has ceased ‘suicide bombing’ attacks against Israel, and claimed the killing of only one Israeli, in a kidnapping attempt in September.

Rather than succumbing to US demands, Hamas leaders have launched a campaign to seek funding from the Arab world.  The neighboring kingdom of Jordan, home to nearly 2 million Palestinian refugees (forced to flee from what is now Israel in 1948), agreed Friday to meet with the Hamas leadership, for the first time since Hamas was declared illegal and ejected from the country.

 The United Arab Emirates, Saudi Arabia and Egypt have been approached for aid money, but Hamas has made no confirmation of Israeli Defense Minister Shaul Mofaz’s statement Friday that he believes Hamas is seeking funding from Iran.