Following last week's Hamas election victory, European foreign ministers met in Brussels Monday and called on Hamas to renounce violence or risk the loss of valuable aid programs. The United States has also threatened to cut off funds, and Israel says it will not allow any transfer of money to what it calls terrorists.
Still reeling from last week's Hamas electoral win, European ministers huddled in Brussels to discuss their next steps. The European Union is the largest aid donor to the Palestinians and provides hundreds of millions of dollars in assistance.
EU ministers said future aid is in doubt unless Hamas agrees to renounce violence, disarm its militia and recognize Israel's right to exist.
Europe and the United States consider Hamas a terrorist organization and Washington has also said it is re-evaluating its aid programs.
Speaking at a news conference in London, U.S. Secretary of State Condoleezza Rice said the United States is attentive to the humanitarian needs of the Palestinian people. But, she said, Hamas cannot have it both ways - advocate peace and violence at the same time.
"I think we're all saying exactly the same thing, that there are choices now confronting Hamas and we will see what they do," she said.
Rice is in London for a meeting of the "Quartet," which includes the United States, the European Union, Russia and the United Nations, and which has taken the lead in trying to revive Middle East peace negotiations.
The United States has set aside more than $200 million in aid to the Palestinians and has indicated that for now funds would be delivered to the government of President Mahmoud Abbas, which has no links to Hamas.
Speaking in Ramallah on Monday, President Abbas called on the international community not to halt funds. Earlier, newly elected Hamas lawmaker Ismail Haniyeh made a similar appeal. Speaking in Gaza, Haniyeh reassured donors that all aid will go to the Palestinian people to pay for salaries and essential services to improve people's daily lives.
But Hamas leaders have also taken on a more defiant tone, saying they'll not be blackmailed and will turn to Arab and Muslim donors if the West cuts off its funding.
For its part, Israel has also threatened to halt the transfer of millions of dollars in customs and tax revenues it collects on behalf of the Palestinian Authority.
Money has become a major issue as Hamas prepares to form a government. Donors have said they will not give money to an extremist organization that advocates violence and yet they are also aware that cutting off funding will further hurt already poverty stricken Palestinians and could result in greater chaos and violence.
Palestinian political analyst, Ali Jerbawi of Ramallah's Birzeit University, said the international community must respect the vote outcome and the fact that Hamas members will control the legislature. But, he said, wait and see what sort of government Hamas forms.
"The government might be from Hamas or from outside Hamas and I think that Hamas is going to go for an outside government," he said.
Jerbawi said a future Palestinian government made up of respected technocrats with no ties to Hamas would be more acceptable to the international community and could provide a way out - allowing aid to be funneled to the government, but not specifically to Hamas.