WASHINGTON, July 12: American aid to the Palestinians is in jeopardy over their ties to the terrorist group Hamas, unwillingness to restart negotiations with Israel and push for statehood at the United Nations over US resistance, congressional Republicans and Democrats warned on Tuesday.

Senior Obama administration officials insisted the assistance — some $550 million this year — is critical to peace and stability in the Mideast, boosting Palestinian security forces and the economy, and they cautioned that cutting off aid would have serious repercussions.

“Our assistance to the Palestinian people is an important building block of our efforts to achieve a comprehensive peace in the Middle East that will allow all people there — Israelis, Palestinians and others — to live their lives in peace, in dignity and in security,” Jacob Walles, deputy assistant secretary of state for Near Eastern Affairs, told a House panel.

With Congress likely to decide on foreign aid sometime in the fall, lawmakers signalled that US assistance to the Palestinians could be eliminated as the two rival Palestinian leaderships — the secular Fatah and the Islamist Hamas _ reconcile and try to form a new government. Israel and the West consider Hamas a terrorist organisation.

“I would suggest to the Palestinian Authority leadership that when you get into a cage with a tiger, you're not a partner; you're a lunch,” said Rep. Gary Ackerman, the top Democrat on the House Foreign Affairs subcommittee on the Middle East and South Asia.

A 2006 law conditions aid to the Palestinians based on whether they acknowledge Israel's right to exist, renounce violence and agree to abide by past agreements.

“As a matter of both law and basic decency, we will never do business with or provide aid to a government controlled by or reporting to terrorists,” Ackerman said.

Walles said the prospects from the agreement between Fatah and Hamas has been “very uncertain,” but if a new government emerges, the US would review the aid and make sure any assistance conforms with the 2006 law.

Further threatening the money is the Palestinians' drive to seek recognition of an independent state at the United Nations in September. The United States has been unable to persuade the Palestinians to abandon the effort. Israel and the U.S. back an independent Palestine but oppose efforts to create one without negotiations. The showdown in the United Nations could come at the same time Congress is deciding on Palestinian aid.

Signalling that both sides face a “watershed moment” in the US-Palestinian relationship, Republican Steve Chabot, the Republican chairman of the subcommittee, questioned the administration's contention that US assistance provides “strong leverage” with the Palestinians when they have reached agreement with Hamas, continue to pursue UN recognition and refuse to commit to new peace talks with Israel. Since the mid-1990s, the United States has provided more than $4 billion to the Palestinians.

Late Monday night, the United States, the United Nations, the European Union and Russia were unable after hours of talks to produce a unified statement on how to proceed to negotiations, a modest goal of the meeting.—AP