No U.S. funds will go to Hamas, Clinton says

By Sue Pleming

SHARM EL-SHEIKH, Egypt (Reuters) - U.S. Secretary of State Hillary Clinton took a hard line against the Islamist group Hamas on Monday, saying $900 million in U.S. aid for the Palestinians was part of broader efforts for Arab-Israeli peace.

Clinton maintained the former Bush administration's anti-Hamas rhetoric and said no money would go to the militant group which Washington says must recognize Israel, renounce violence and sign up to past Israeli and Palestinian agreements.

"We have worked with the Palestinian Authority to install safeguards that will ensure our funding is only used where and for whom it is intended and does not end up in the wrong hands," she said. Washington says Hamas is a terrorist organization.

In her first foray into Middle East peacemaking, she made it clear President Barack Obama was committed to pursuing Arab-Israeli peace and the aid package -- about one third of it for Gaza -- was aimed at accelerating those efforts.

"Our response to today's crisis in Gaza cannot be separated from our broader efforts to achieve a comprehensive peace," Clinton told a donors' conference in Egypt held to help the Palestinian economy and rebuild Gaza after Israel's assault on the Hamas-ruled territory in December.

"Only by acting now can we turn this crisis into an opportunity that moves us closer to our shared goals."

Clinton will go to Israel and the West Bank where the U.S. special envoy to the Middle East for the Obama administration, George Mitchell, has been speaking to both sides to assess options for restarting peace talks.

"We will vigorously pursue a two-state solution to the Israeli-Palestinian conflict," said Clinton, whose husband, President Bill Clinton, failed to secure a peace deal.

Clinton, addressing a news conference, avoided all questions on whether she would put pressure on Israel to lift its blockade of Gaza or end its settlement activity.

NO MAJOR SHIFT

Asked earlier in the day if he saw a major shift from the Bush administration's Middle East polices, Egypt's Foreign Minister Ahmed Aboul Gheit, replied: "No, I do not think (so)."

It was Clinton's first major international forum in her new job and she had back-to-back meetings with officials from Saudi Arabia, Bahrain, Egypt, the United Arab Emirates, Italy and others. She also shook hands with Syria's foreign minister and chatted for a few minutes.

European diplomats have urged Clinton to press Israel to ease restrictions on the border crossings into Gaza, saying aid will make no difference unless it can get through.

"She will go to Israel and she will certainly make the case that we have been making," said European Union External Relations Commissioner Benita Ferrero-Waldner after seeing Clinton with the Quartet of Middle East mediators.

No statement was issued after the meeting of the Quartet, comprising the United States, Russia, the United Nations and the EU.