| SHARM EL-SHEIKH, Egypt
SHARM EL-SHEIKH, Egypt 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.
A senior European diplomat said some European countries were looking at how they could be more flexible in dealing with a future Palestinian government that could include Hamas, which won a Palestinian election in 2006.
Palestinian groups are holding talks to try to end the schism between the Hamas-ruled Gaza Strip and the occupied West Bank, where President Mahmoud Abbas's Fatah group holds sway, but Clinton said the Western-backed Palestinian Authority of Abbas offered a more peaceful future.
"Not the violence and false choices of extremists whose tactics including rocket attacks that continue to this day, only will lead to more hardship and suffering," she said, in reference to rockets fired by Hamas into the Jewish state.
"For the Palestinians, it means that it is time to break the cycle of rejection and resistance and to cut the strings pulled by those who exploit the suffering of innocent people."
Of more than $900 million in U.S. funding, which has to be agreed by Congress, $300 million was earmarked to provide humanitarian aid for Gaza after Israel's offensive, launched with the stated aim of stopping the rocket attacks.
(Editing by Andrew Dobbie)