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Full Article Follow Reuters Facebook Twitter RSS YouTube Read WRAPUP 2-China warns of trade war if U.S. bill passes 5:58am EDT Top Republican pours cold water on China yuan bill | 11:47am EDT Recovery "close to faltering", Fed could act 11:04am EDT Amanda Knox heads for home after acquittal | 10:43am EDT Nasdaq briefly gains 1 percent 11:29am EDT Discussed 345 Exclusive: Democrats push tax hikes first in deficit talks 222 About 400 arrested in Wall Street protest 80 BofA to introduce $5 monthly debit card fee Watched iPhone 5: What to expect Mon, Oct 3 2011 AlphaDog - an old dog with new tricks Mon, Oct 3 2011 Japanese airline, ANA, apologises for plane flip Fri, Sep 30 2011 U.S. aid freeze threatens Palestine state projects Tweet Share this Email Print Related News Israel accepts Quartet call for peace talks Sun, Oct 2 2011 Abbas says no talks without Israeli settlement freeze Mon, Sep 26 2011 U.N. will take weeks on Palestinian bid: Abbas Sat, Sep 24 2011 Abbas stakes Palestinian claim to state at U.N. Fri, Sep 23 2011 Abbas speech lifts Palestinian spirits Fri, Sep 23 2011 Analysis & Opinion Autocrats rule, democrats flounder Latin America rejects old U.S. approach in drugs war Related Topics World » United Nations » A Palestinian farmer walks with a donkey past an Israeli army gate as he makes his way to harvest olive trees on the outskirts of the West Bank village of Salem, near the Jewish settlement of Elone Moreh, east of Nablus, October 3, 2011. Credit: Reuters/Abed Omar Qusini By Ali Sawafta RAMALLAH, West Bank | Tue Oct 4, 2011 10:12am EDT RAMALLAH, West Bank (Reuters) - Economic and humanitarian projects deemed vital for peace in the Middle East are threatened by a freeze on $200 million in aid by U.S. Congress members opposed to a Palestinian bid for statehood at the United Nations, Palestinians and Western diplomats say. They say the freeze, on money approved for the Palestinians this year, mixes politics with practical efforts to build peace with Israel and establish a Palestinian state. The Palestinian Authority cabinet, in a statement issued after its weekly meeting on Tuesday, "expressed hope that the U.S. Congress would reconsider the freezing of aid allocated to the Palestinian National Authority." "Some parties in the Congress stood not only against the interests of the Palestinian people but also against any possibility of achieving growth for a people under occupation," Economy Minister Hassan Abu Libda said. "It was strange, and I expect the decision will be viewed negatively by Palestinian public opinion and it will influence the entire credibility of the United States," he added. "We are talking about $200 million divided among projects of the private sector, projects that have to do with the water sector, the infrastructure." CLINICS AND DOCTORS Projects under way with USAID for the past three years include a five-year development of the health sector, training medical and administrative staffers, rehabilitating hospitals and equipping them. Health Minister Fathi Abu Maghly said none of the health projects, worth a total of $87 million, was suspended as yet. In Jericho, work had been stopped on a municipality building. U.S. President Barack Obama is lobbying Congress to unblock the aid, although he has also warned the Palestinians that seeking statehood via a U.N. vote cannot be a substitute for a negotiated peace treaty with Israel. Palestinian President Mahmoud Abbas last month submitted a formal application to the U.N. Security Council for recognition of Palestinian statehood, ignoring a U.S. threat to veto the measure if it is put to vote. Palestinians say Obama's veto threat was a clear indication that Washington was not a genuine "honest broker" in diplomatic efforts to resolve the 63-year-old Middle East conflict. TALKS HALTED Direct peace negotiations collapsed a year ago after Israeli Prime Minister Netanyahu refused to extend a limited moratorium on building Jewish settlements in the West Bank. Abbas says he will only return to talks if settlement building is stopped, complicating efforts by the "Quartet" of Middle East peace mediators -- the United States, the European Union, the United Nations and Russia -- to get both sides back to the negotiating table quickly. "What this (U.S. aid) money actually goes to are economic support projects, social projects and ... security," said Quartet peace envoy Tony Blair, who is also trying to persuade Congress to let the aid flow as planned this year and next. "I still hope at some point that it will be possible to persuade people that this isn't really a good idea; that even if you're completely opposed to the Palestinian bid in the United Nations, this is not the right way to respond to it because it's harming Palestinian people and it's harming the very things that over the past few years we've been most strongly supportive of." The PA has "made huge strides on security, on economic infrastructure, on all sorts of things to do with the growth of the economy which have resulted in double-digit growth on the West Bank in the last few years," making the Palestinians less aid-dependent, Blair told the BBC on Monday. The PA, which exercises limited rule in parts of the Israeli-occupied West Bank, has often failed to pay its 150,000 employees on time and in full and remains reliant on foreign aid to fill a deficit projected at $900 million this year. The International Monetary Fund and the World Bank say that financial problems threaten the state-building program overseen by Palestinian Prime Minister Salam Fayyad since 2009. The 27-member European Union, the PA's single biggest funder, has said that it will continue funding the Palestinian government. (Additional reporting by Nidal al-Mughrabi in Gaza) (Reporting By Douglas Hamilton) World United Nations Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (2) StevenFeldman wrote: Isn’t the dole wonderful? We give billions of dollars to people who despise us, danced in the streets on 9/11, refuse to live in peace with their neighbors, and whose greatest contribution to mankind is the suicide bomb. Let their Arab brethren, who are ostensibly so concerned with their welfare, support them with a tiny portion of the trillions of dollars in oil wealth they have confiscated from the West. Oct 04, 2011 11:39am EDT -- Report as abuse StevenFeldman wrote: Economic and humanitarian projects? You mean like the hundreds of millions of dollars sent to Hamas so they can buy and build rockets to fire into civilian communities in Israel? Nice piece of propaganda, Reuters. Oct 04, 2011 11:46am EDT -- Report as abuse See All Comments » Add Your Comment Social Stream (What's this?) 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