The leading Mideast peace brokers have come up with a plan to help the Palestinians by resuming aid, which has been frozen since Hamas formed the government in March.

The funds will bypass Hamas, the political and militant group that won the Palestinian Authority election in January but sparked an international crisis over its continued refusal to recognize Israel's right to exist.

Palestinian Foreign Minister Mahmoud Zahar said on Sunday that he plans to continue hand carrying large amounts of money into Gaza despite European objections.
(Bassem Tellawi/Associated Press)

The so-called Quartet — which consists of the United States, the European Union, the United Nations and Russia — said the aid money would cover essential supplies, such as health services, utilities and fuel.

There will also be direct cash payments to the poorest Palestinians in the West Bank and Gaza Strip.

Western donors and Israel cut off millions of dollars in aid to the Palestinians shortly after the election, saying it would not be resumed unless Hamas renounces violence, recognizes Israel and agrees to respect existing peace agreements.

The emergency aid scheme has been adopted in order to stop the territories from sliding into chaos.

Palestinian government employees, who make up more than one-third of the workforce in the West Bank and Gaza, have not been paid for more than three months.

Earlier in the week, civil servants stormed the Palestinian Authority parliament in Gaza, shouting that they were hungry and demanding to be paid.

Tensions have also been exacerbated by a power struggle between Hamas and the Fatah party, led by Palestinian President Mahmoud Abbas, which dominated the legislature for decades until the election.

EU announces $141M in aid

The European Union drew up the proposal and won endorsement from its partners in Brussels on Saturday. The Europeans plan to channel aid worth €100 million ($141 million Cdn) through the World Bank.

But EU leaders insisted there will be no contact with Hamas until it meets Western demands.

The four peace brokers said the money would begin to flow by early July, with a review in three months' time.

Israel, which is to be presented with the plan by EU Foreign Minister Benita Ferrero-Waldner on Monday, has reserved comment.

Abbas called the plan a good step, but added that it was inadequate.

Suitcases of cash will keep flowing

European monitors based at the border crossing between Egypt and Gaza have complained that Palestinian ministers are breaching regulations and smuggling in millions of dollars in cash.

Palestinian Foreign Minister Mahmoud Zahar brought in $20 million US in his suitcases via the Rafah crossing this week after visiting Indonesia, Malaysia, Brunei, China, Pakistan, Iran and Egypt.

On Saturday, he said he would continue to funnel the money despite European objections.

"This is a legal process and we are not going to allow anyone to prevent us," he said.

Zahar also said a recent Iranian pledge of $50 million in cash, 300 cars and two aircraft would soon be delivered.