The international Quartet on the Middle East Tuesday endorsed creation of what was termed a "temporary international mechanism" to ease the financial crisis in the Palestinian areas. The European plan would channel aid to Palestinians but bypass the Hamas-led government.

The decision to set up the temporary funding vehicle appeared to be a concession to the Europeans by the United States, which has taken a hard line against any economic rescue operation that could benefit the Hamas-led Palestinian government.

Announcement of the move came in a closing statement that capped a day of meetings at the United Nations by the Quartet, dominated by discussion of the economic and political turmoil in Gaza and the West Bank.

Few details of the structure of the funding plan were given, though it is clear it will be set up and run by the European Union with no apparent role by the United States.

Benita Ferrero-Waldner

The European Union's External Relations Commissioner, Benita Ferrero-Waldner of Austria, who had pressed for action to avert a fiscal collapse of the Palestinian economy, said the aid plan would involve the World Bank and United Nations and international donors, but bypass Hamas officials.

"Of course it is particularly for the basic human needs, thinking of health, of education for instance," said Benita Ferrero-Waldner. "But of course now we have to set it up. So I cannot give you any details at this stage. But I can tell you it's about, on the one hand of a fiscal clear transparency and control, and on the other hand of a distribution directly to the Palestinian people, without going through the Palestinian government."

Secretary of State Rice, for her part, said the Bush administration is not indifferent to humanitarian needs of the Palestinians and will be sending $10 million worth of emergency medicine and related supplies to Gaza and the West Bank, to be distributed by clinics run by non-governmental organizations.

Condoleezza Rice

Rice said the funding mechanism being set up by the Europeans will be clearly defined in scope, and temporary with a review of its further usefulness to be conducted after three months:

"We have said that after three months this will be evaluated," said Secretary Rice. "So the goal is not here to transfer responsibility for meeting the needs of the Palestinian people from its government to the international community. It is to provide assistance to the Palestinian people so that they do not suffer deprivation and do not suffer a humanitarian crisis. That's the goal here. That's why it's of limited duration and of limited scope."

The Quartet, which includes the United States, Russia, the European Union and the United Nations, said after the Hamas election victory in January that donors should withhold direct aid unless a Hamas-led government recognized Israel's right to exist, renounced terrorism and accepted previous Palestinian commitments including to the Quartet's 2003 Middle East Peace road map.

In their Tuesday statement, the Quartet expressed great concern that Hamas has failed to commit itself to those terms.

They also renewed their concerns about Israel's settlement expansion and the route of its security barrier in the West Bank, and urged Israel to bear in mind the potential consequences of an escalation of military activity in Palestinian areas.

In an usual move, the Quartet members held a morning meeting with the foreign ministers of Egypt, Jordan and Saudi Arabia before debating the Palestinian financial crisis in a closed-door afternoon session at U.N. headquarters.