JERUSALEM, Oct 15 A $42 million American program aimed at bolstering Palestinian opposition to Hamas has added more mistrust to the strained and increasingly bloody relations between the ruling Islamic group and the rival Fatah Party, both sides say, further diminishing hopes that they can form a unity government.

Hamas is accusing Fatah of acting as Washington’s stooge in the region, contributing to worsening tensions that are threatening to spill over into a new round of violence.

The US State Department put aside the money last spring after Hamas won Palestinian legislative elections. The money, meant to ‘protect and promote moderation and democratic alternatives to Hamas’, is among hundreds of millions of dollars in funds the US has allocated to bypass Hamas and help ordinary Palestinians.

The US, along with other western donor nations, cut off funds to the Hamas-led government after the group took power in March, listing Hamas as a terror organisation. Hamas continues to reject international calls to recognise Israel’s right to exist.

Although US officials say none of the $42 million has been spent yet, Hamas officials accused Washington of meddling in Palestinian affairs. Hamas spokesman Salah Bardawil said the ‘American financing’ is clearly meant to return Fatah, which dominated Palestinian politics for four decades, to power.

“America is trying to consolidate its idea of a crusade launched by (US President) Bush, and they want tools for this war,” Mr Bardawil said.

Micaela Schweitzer-Bluhm, spokeswoman for the US Consulate in Jerusalem, said the US doesn’t send any money directly to Palestinian political parties. Instead, it provides funding and expertise to non-profit groups, including those with ties to political parties not branded as terrorist groups.

“We build their capacity to make them more capable of participating in elections,” Schweitzer-Bluhm said.

Hamas appears on the US list of terrorist groups; Fatah, led by President Mahmoud Abbas, does not. The US has embraced Mr Abbas, a moderate elected separately last year, as a viable negotiating partner.

Still, Schweitzer-Bluhm said it was “misconstruction’ to say that US is trying to topple Hamas.

Fatah officials have sought to distance their party from the US, which is widely viewed by Palestinians as biased toward Israel.

Fatah spokesman Mohammed Hourani said the party doesn’t accept American money. “It (Fatah) refuses any aid from the US, whom we consider an unfair mediator,” he said.

“This news harms the reputation of the movement and Hamas is exploiting this to attack us,” said Ahmad Abdul Rahman, another Fatah official.

However, many non-profit groups dominated by Fatah receive American funds, including sports clubs, research centers, relief organizations, local councils in villages and towns.

The tensions have added another obstacle to negotiations between Fatah and Hamas on forming a unity government. Abbas believes a partnership will force Hamas to moderate its views and help get crippling economic sanctions lifted.

While Hamas has been agreeable to the idea, talks have been stalled for weeks over Hamas’ refusal to recognize Israel.—AP