Both the US and the European Union announced that they will not be cutting off aid to the Palestinian people, despite reports to the contrary.
After an unsuccessful Middle-East tour by US secretary of State Condoleeza Rice last week, in which she attempted to isolate and cut off aid to the Palestinians, David Welch, a senior US diplomat, announced this weekend that the United States would not cut off funding to the Palestinian people.  At the same time, European Union officials are meeting to discuss ways to maintain funding to prevent a fiscal crisis in Palestine

Said Welch, "The United States has long been a supporter of the Palestinian people, through a substantial contribution of our foreign assistance funds… We continue to be devoted to the humanitarian needs of the Palestinian people and it shall remain so.
"It is our belief that it is important for the people in the Palestinian territories … to have a good life in safety and security with economic wellbeing."

The European Union diplomats expressed similar sentiments, saying, "It is not in our interest to see the Palestinian Authority break down, especially when the Israelis have stopped disbursing customs duties".

Israeli authorities control Palestinian tax revenues worth one-third of the Palestinian government’s budget, and have illegally seized all Palestinian tax money following a victory by the Hamas party in Januray legislative elections in Palestine.

The British Telegraph newspaper reported Monday that France is spearheading the diplomatic move to unblock the funds. The move is also said to be backed by the European commission.

The paper quoted unnamed French officials as saying that the French government wanted "the money freed immediately, and handed over in one block, as part of a strategy of reaching out to Hamas."

French officials have expressed hopes that Hamas’ victory in the January elections for the Palestinian parliament will have a moderating influence on the organization, which is widely credited with a number of bombings inside Israel.