International Reaction to the Palestinian Unity Government

International Reaction to
the Palestinian Unity Government
Paul Morro
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
The new Palestinian unity government established in March 2007 complicates U.S.
policy toward the Palestinian Authority (PA) and the peace process. When Hamas took
power last year, the Bush Administration, along with its Quartet partners and Israel,
responded by cutting off contact with and halting assistance to the PA. The
Administration sought to isolate and remove Hamas while supporting moderates in
Fatah, led by President Mahmud Abbas. The international sanctions have not driven
Hamas from power, and instead, some assert they may have provided an opening for
Iran to increase its influence among Palestinians by filling the void. Now that Hamas
and Fatah are sharing power, it will be harder to isolate Hamas. The United States and
European countries have held meetings with non-Hamas members of the new
government, while Israel continues to rule out all contact with PA ministers. Arab
states, led by Saudi Arabia, are pressing for recognition of the new government and an
end to the international boycott. Some observers believe Saudi efforts to gain acceptance
of the unity government and restart Israeli-Palestinian peace talks may be an effort to set
the price for Saudi cooperation on other U.S. policies in the region. In 2006, Congress
passed P.L. 109-446, the Palestinian Anti-Terrorism Act of 2006, to tighten existing
restrictions on aid to the Palestinians. In 2007, Representative Ileana Ros-Lehtinen
introduced H.R. 1856, which would amend the original Act to further restrict contact
with and assistance to the PA. This report will be updated as events warrant.
2006 Palestinian Election. Hamas, a U.S. State Department-designated Foreign
Terrorist Organization, surprised most observers by winning a majority of seats in the1
Palestinian legislative election in January 2006. The election was judged by international

1 Hamas won 74 of the 132 seats in the Palestinian Legislative Council, Fatah won 45 seats, and
smaller parties claimed the remainder. Hamas’s popular vote victory was far narrower, 44% to

observers to be competitive and “genuinely democratic.”2 Hamas had boycotted previous
Palestinian national elections because they were held under the terms of the Oslo Accords,
which the group rejected. Immediately after the election, the Middle East Quartet (the
United States, Russia, the European Union (EU), and the United Nations) indicated that
assistance to the PA would only continue if Hamas renounced violence, recognized Israel,
and accepted previous Israeli-Palestinian agreements, which Hamas refused to do. In
March 2006, Hamas formed a government without Fatah, the secular party that had
dominated Palestinian politics for decades, which refused to join a Hamas-led coalition.
On April 7, 2006, the United States and the EU announced they were halting assistance
to the Hamas-led PA government but that humanitarian aid would continue to flow
through international and non-governmental organizations (NGOs). The EU has been the
PA’s largest donor since it was created in 1996 under the Oslo peace accords. At the
same time, Israel began withholding about $50 million in monthly tax and customs
receipts that it collects for the PA. In 2005, international assistance and the
Israeli-collected revenues together accounted for about two-thirds of PA revenues. In
addition, the PA lost access to banking services and loans as banks around the world
refused to deal with the it for fear of running afoul of U.S. anti-terrorism laws and being
cut off from the U.S. banking system.
The resulting fiscal crisis left the Hamas-led government unable to pay wages
regularly and deepened poverty levels in the Palestinian territories. The Hamas-led
government was forced to rely on shrinking domestic tax revenues and cash that Hamas
officials carried back from overseas. Press reports indicate that much of this cash
emanated from Iran.3 By the end of 2006, tensions in the West Bank and Gaza Strip were
rising as living conditions deteriorated and PA employees, including members of the
security forces, went unpaid for weeks or months. Armed supporters of Fatah and Hamas
clashed repeatedly, trading accusations of blame, settling scores, and drifting into
lawlessness. More than 100 Palestinians were killed in the violence.
The Mecca Accord. After months of intermittent talks, on February 8, 2007,
Fatah and Hamas signed an agreement to form a national unity government aimed at
ending both the spasm of violence and the international aid embargo that followed the
formation of the initial Hamas-led government. The accord was signed by PA President
and Fatah leader Mahmud Abbas and Hamas political leader Khalid Mish’al in Mecca,
Saudi Arabia, after two days of talks under the auspices of Saudi King Abdullah. Under
the agreement, Ismail Haniyeh of Hamas remains prime minister. In the new government,
Hamas controls nine ministries and Fatah six, with independents and smaller parties
heading the remainder. Among the independents are Finance Minister Salam Fayyad, an
internationally respected economist, and Foreign Minister Ziad Abu Amr, a reformer and
ally of President Mahmud Abbas. Demonstrating the differing priorities of Fatah and
Hamas, the new government’s platform calls for establishment of a Palestinian state “on

1 (...continued)
Fatah’s 41%. Hamas benefitted from a complicated electoral system that produced a hefty seat
bonus in some districts where the popular vote totals were quite close.
2 Carter Center International Observer Delegation to the Palestinian Legislative Council Elections
Statement, January 2006, [].
3 Conal Urquhart, “Iran Replaces EU as Top Palestinian Donor,” The Guardian, January 15,


all the lands that were occupied in 1967 with Jerusalem as its capital,” and at the same
time affirms the Palestinians’ right to “resistance in all its forms” and to “defend
themselves against any ongoing Israeli aggression.” The new government commits to
“respect” previous agreements signed by the Palestine Liberation Organization (PLO) but
does not explicitly renounce violence or recognize Israel.4 The government platform
states that any peace agreement reached will be submitted for approval to either the
Palestine National Council (the PLO legislature) or directly to the Palestinian people in
a referendum.
Reaction to the Unity Government
The United States. The Bush Administration expressed disappointment with the
unity government platform and said that Prime Minister Haniyeh of Hamas had “failed
to step up to international standards.” The Administration, however, is keeping open the
option of meeting with non-Hamas members of the new government. A spokeswoman
for the U.S. Consulate in Jerusalem said “We won’t rule out contact with certain
individuals with whom we have had contact before. We will evaluate the situation as we
go along.” On March 20, U.S. Consul General in Jerusalem Jacob Walles met with
Palestinian Finance Minister Fayyad in Ramallah, the first diplomatic contact between the
United States and the Palestinians in a year. On April 17, Secretary of State Condoleezza
Rice held a half-hour meeting with Fayyad at the State Department. According to press
reports, Fayyad separately controls accounts held by the PLO, and U.S. officials are
examining regulatory ways to allow donor funds from Arab and European countries —
but not from the United States — to flow to those accounts without violating U.S. law.
The Administration also has sought to redirect some assistance to PA President
Abbas. In late 2006, the State Department notified Congress of the President’s intent to
reprogram up to $86 million in prior-year funding to support efforts to reform and
rehabilitate Palestinian civil security forces loyal to Abbas. However, the House
Appropriations Committee placed a hold on these funds, seeking more information on
where and why the money was to be spent. After the Palestinians reached agreement on
the Fatah-Hamas power sharing arrangement, other Members of Congress reportedly
expressed further doubts about where the money was going, fearing it may end up with
Hamas. In March 2007, Secretary Rice told a House Appropriations subcommittee that
the Administration was now seeking $59 million for Abbas ($43 million for training and
non-lethal assistance to the Palestinian Presidential Guard and $16 million for
improvements at the Karni crossing, the main terminal for goods moving in and out of
Gaza). No holds were placed on this request.
The European Union. The EU’s reaction to the Palestinian unity government has
tracked closely with the United States thus far. EU officials have begun meeting with
non-Hamas members of the PA government, but left in place the ban on direct aid. The
EU has had some success in forging consensus on its approach to the Israeli-Palestinian
conflict over the last few years. The EU views resolving the Israeli-Palestinian conflict

4 Previous agreements signed by the PLO and Israel, specifically the exchange of letters between
Israeli Prime Minister Rabin and the late PLO Chairman Yasir Arafat on September 9, 1993,
renounce violence and recognize Israel’s “right to exist in peace and security.” Therefore, some
analysts suggest the new platform implicitly rejects violence and recognizes Israel.

as key to reshaping the Middle East and promoting stability on Europe’s periphery.
Moreover, EU member states are committed to maintaining a common EU policy on this
issue to boost the credibility of the Union’s evolving Common Foreign and Security
Policy. Still, differences persist among member states. According to some press reports,
France, Spain, and Italy may be more inclined to resume direct aid to the PA in the near
term while other EU members, such as the UK and Germany, are more wary.5 A Quartet
statement after the unity government was formed said it will be measured not only on the
basis of its composition and platform, “but also its actions.”6 Some observers saw this
as a softening of the Quartet position, which could allow for a possible resumption of
direct aid. European officials reportedly argued for more flexibility, saying the
government should not be judged purely on the semantics of its official platform but on
the future actions of Hamas. Many European policy makers hope that this strategy will
encourage a further moderation of Hamas’ position and facilitate forward movement in
the peace process.
Defying the EU policy, 10 European Parliament members met with Hamas Prime
Minister Haniyeh in Gaza on May 1. An EU spokesman said there had been no change
in the EU policy.7 Norway, which is not a member of the EU, has gone the farthest
among European states by normalizing relations with the Palestinian government and
announcing it was prepared to resume direct aid to the PA. Norwegian Foreign Minister
Jonas Gahr Stoere met with Prime Minister Haniyeh in March.
Russia. Although a member of the Quartet, Russia has taken a different approach
to the Hamas government from the beginning by maintaining contact with Hamas officials
and recently arguing to lift the aid embargo. Hamas political leader Khalid Mish’al has
twice visited Moscow since Hamas took power, most recently in February 2007. Foreign
Minister Sergey Lavrov has urged Hamas leaders to meet the Quartet conditions, but
without success. Russian officials prefer to keep lines of communication open with all
parties as they seek to position themselves as a mediator between Arabs and Israelis. This
in turn would serve their larger ambition of reestablishing Moscow as a significant player
in the region. Nonetheless, the Russians continue to see the Quartet as a useful and
necessary mechanism and are unlikely to break ranks with it completely.
The United Nations. Neither the U.N. Security Council nor the U.N. General
Assembly have adopted resolutions or taken a position in response to the formation of the
unity government. U.N. officials continue to stress the necessity for the Palestinian
government to meet the three Quartet conditions. Secretary-General Ban Ki-Moon
declined to meet Hamas officials on a March visit to the region. After meeting with PA
President Abbas, Ban welcomed the new government’s formation, but said that “the
atmosphere is not fully right” for talks with Hamas.8

5 “Transatlantic Tensions,” The Economist, April 7, 2007.
6 Quartet Statement, March 21, 2007, [


7 Jamie Smyth, “MEPs Ignore EU Policy of Boycotting Hamas Officials,” Irish Times, May 2,


8 “Secretary General’s Joint Press Conference with President Mahmoud Abbas,” Ramallah,

Saudi Arabia. After brokering the Mecca Accord, the Saudis continued their
diplomatic push at the Arab League summit in Riyadh in March. During a speech at the
summit, Saudi King Abdullah called for an end to the international boycott of the PA in
light of the agreement between Fatah and Hamas to form a unity government. In addition,
the summit communique relaunched the Arab Peace Initiative of 2002, which calls for full
Israeli withdrawal from the territories occupied in 1967, creation of an independent
Palestinian state with East Jerusalem as its capital, and a just, agreed upon solution to the
refugee problem in exchange for an end-of-conflict agreement in which all Arab states
would enter into peace agreements and establish normal relations with Israel. Analysts
speculate that the recent Saudi diplomatic drive has several purposes. First is to end the
intra-Palestinian violence and resume long-stalled peace negotiations with Israel. Second,
by securing Arab and perhaps international recognition of a government that includes
Hamas and then relaunching peace talks with full Arab backing, the Saudis hope to bring
Hamas into the Arab consensus, moderate its anti-Israeli ideology, and ultimately get it
to accept a two-state solution. Finally, by creating momentum toward peace, the Saudis
are seeking to undermine the regional influence of Iran and rejectionist groups like
Hezbollah. Some observers also note that Saudi efforts to gain acceptance of the unity
government and restart Israeli-Palestinian peace talks may be an effort to set the price for
Saudi cooperation on other U.S. policies in the region, notably toward Iran.
Other Arab States. Among the Arab states, only Libya refused to attend the
Riyadh summit and join the call to back the new Palestinian government and the Arab
peace initiative. The Arab League subsequently appointed Jordan and Egypt to promote
the initiative with Israel and persuade it to accept the plan as the basis for peace talks.
Jordan’s King Abdullah II has been the most outspoken Arab leader on the need to seize
the Arab peace initiative as a way to restart Israeli-Palestinian peace talks. In March
2007, speaking to a joint meeting of Congress, he urged renewed international, and
especially U.S., engagement to move the process forward. In April, he told a group of
visiting Israeli Knesset (parliament) members that the initiative was a historic opportunity
for Israel to gain recognition by the Arab states and true integration into the region.
Israel. The Israeli government is maintaining a complete ban on meetings with
Palestinian ministers, including non-Hamas ministers, and continues to withhold tax and
customs revenues that it collects on behalf of the PA. Israel is unwilling to enter into
direct talks with a Palestinian government that includes Hamas, which has killed hundreds
of Israelis in terrorist attacks and whose charter calls for an Islamic state in all of the
former British mandate of Palestine. However, Prime Minister Ehud Olmert meets
regularly with PA President Abbas and in mid-April the two reportedly discussed
economic aspects of a future Palestinian state. Olmert has also spoken of “positive
aspects” of the Arab peace initiative and stated his willingness to meet any Arab leader
to discuss it.
Iran. Since the early 1990s, Iran has supplied cash, arms, and training to Hamas, but
most observers say the relationship has been an uneasy one. Iran has sought a foothold
in the Palestinian territories, while Hamas jealousy guards its political and operational
independence. The relationship has been relatively unaffected by the widening rift

8 (...continued)
March 25, 2007, [].

between Sunni and Shiite Islam, although Hamas protested the December 2006 execution
of Saddam Hussein by the pro-Iranian government of Iraq. Since the aid boycott was
enacted, Iran has increased its assistance to Hamas. Hamas officials visiting Tehran in
the past year often returned carrying large sums of cash, according to press reports. The
International Monetary Fund (IMF) estimates that in 2006 some $70 million in cash was
carried into the territories, most of it thought to be from Iran.9 After a visit to Iran in
December 2006, Prime Minister Haniyeh said Iran had agreed to provide $120 million in
assistance in 2007 and up to $250 million in total.10 Israeli security officials have warned
of growing Iranian influence in Gaza. The head of the Israel Defense Force Southern
Command, Maj. Gen. Yoav Galant, said in April 2007 he believes a large number of
“Iranian terror and guerrilla experts” are operating in the Gaza Strip, training Palestinian
Recent Legislation
On December 21, 2006, President Bush signed into law P.L. 109-446, the Senate
version of the Palestinian Anti-Terrorism Act of 2006, which bars aid to the Hamas-led
Palestinian government unless, among other things, it acknowledges Israel’s right to exist
and adheres to all previous international agreements and understandings. It exempts
funds for humanitarian aid and democracy promotion. It also provides $20 million to
establish a fund promoting Palestinian democracy and Israeli-Palestinian peace. The law
limits the PA’s representation in the United States as well as U.S. contact with Palestinian
officials. In a signing statement, the President asserted that these and several other
provisions of the bill impinge on the executive branch’s constitutional authority to
conduct foreign policy and he therefore viewed them as “advisory” rather than
“mandatory.” The original House version of the bill (H.R. 4681, passed on June 23,
2006) had been seen by many observers as more stringent as it would have made the
provision of U.S. aid to the PA more difficult even if Hamas relinquishes power.
In March 2007, Representative Ileana Ros-Lehtinen introduced H.R. 1856, the
Palestinian Anti-Terrorism Act Amendments of 2007, which would amend the original
Act to further restrict contact with and assistance to the PA.

9 IMF, “West Bank and Gaza: Fiscal Performance in 2006,” March 2007.
10 “Haniyeh Says Iran Pledges $250 Million in Aid for Palestinians,” Dubai Al-Arabiyah
Television in Arabic, December 11, 2006, Open Source Center document number
11 Amos Harel, “Senior IDF Officer Confirms Iran Training Militants in Gaza,” Ha’aretz, April

22, 2007.