Blair Makes One Last Push in Middle East With Palestinian Funding Plan

Tony Blair yesterday proposed a controversial plan to bolster Mahmoud Abbas in his escalating battle against Hamas by funnelling millions of pounds in aid directly to security forces under the Palestinian leader's control.

The risky move, probably Mr Blair's last power play on the Palestinian territories before he leaves office, has been agreed with the US and is designed to break the deadlock that has held back progress in the Middle East for months.

The plan also introduces a proposal for a new framework for talks on a Palestinian state to be agreed in a matter of weeks.

Significantly, however, Mr Blair is suggesting that some of the aid be used to fund the civilian police and increase Mr Abbas's own security guard, seen as one of the more reliable forces in the region. The guard could be used to secure border passages. Some reports say as much as $26m (£13m) in aid would be required.

Ed Balls, the economic secretary to the Treasury, arrived in Israel last night to discuss details of the aid. Meanwhile, Mr Blair faced the accusation at home that he was in danger of funding militias in a country on the brink of civil war.

Mr Blair laid out his plan following a meeting with Mr Abbas in Ramallah where he promised he "would not rest for a single moment" until a two-state solution was secured. Mr Blair's office said the funding plan would require some new mechanism to ensure that the money, predominantly EU aid, was spent on agreed programmes and did not fund Fatah party militias or corruption.

The EU blocked aid to the Palestinian authority following the surprise election of the militant group Hamas in January. Since June the EU, through a temporary international mechanism, has sent $329m (£170m) to fund some public sector salaries and health services, bypassing the Hamas government.

But delays have led to an absence of basic medicine, school closures and rubbish piling up in the streets. Hamas insists that its political support has not been damaged by the fiscal crisis.

In what Mr Blair praised as a landmark speech, Mr Abbas called at the weekend for early elections for the presidency and the legislative assembly, saying that was the only way to end the impasse created by Hamas's refusal to recognise Israel. Months-long talks between Mr Abbas and Hamas on forming a national unity government have foundered, while neither Israel nor the Quartet - the US, UN, Russia and the EU - will negotiate with Hamas until it renounces violence.

Mr Blair urged the Quartet to back Mr Abbas, telling the Palestinian president: "If the international community means what it says about supporting people who want a two-state solution, who are moderate and who are prepared to shoulder their responsibilities, then now is the time for the international community to respond to the position you have set out."

Referring to Hamas, Mr Blair said: "No one should have a veto on progress. Nobody should be able to say to [Mr Abbas] or the Palestinian people or the international community that we are going to stop progress being made towards a two-state solution, which is the only solution that is going to bring peace. The train should leave the station and it's time to get on board," he said. Mr Blair's spokesman claimed the Hamas position amounted to blackmail.

Meeting with the Israeli prime minister, Ehud Olmert, Mr Blair also privately urged Israel to accept that with a new funding mechanism in place the Israeli government could release as much as $700m in tax receipts currently withheld from the Palestinian authority because it says the money would go to Hamas.

Mr Abbas also said he was ready to meet Mr Olmert, saying: "We need each other. We have a joint cause."

Mr Blair will face accusations that the plan discussed with the US and the EU subverts the Palestinian constitution by giving Mr Abbas de facto powers over police and other public services, which are constitutionally under the control of the Hamas-led government.

But Mr Abbas hopes a peace breakthrough with Israel and increases in aid funnelled through his office can bolster his standing in an electoral fight with Hamas that might not, because of legal challenges, take place until late spring.

He also hinted that he might seek re-election, joking that there were no American, British or Israeli voters at the ballot boxes when he was elected. "Political plurality does not mean allowing multiple authorities, factional armament and the reign of lawlessness," he added.

Meanwhile, the Labour MP Joan Ruddock warned against Mr Blair's plan, saying the international community is getting in very deep if it is deciding who runs the police and security services in Palestine. "The danger is that we end up arming one militia on the brink of a civil war."