Washington, April 8 - The United States and the European Union  announced on Friday that they would re-route all payments to the  Hamas - led Palestinian government and that aid would flow to Palestinians only through the United Nations  and other independent organizations.

"The new Palestinian government must take responsibility for the consequences of its policies," said Secretary of State Condoleezza Rice, citing the failure of the Hamas-led government to meet donors' demands that it recognize Israel, renounce violence and respect previous Israeli-Palestinian agreements.

The United States cutoff would affect $400 million of aid that has not yet been expended. Of that sum, however, about $100 million would be redirected to the United Nations and other non-Palestinian groups to spend for basic human needs like food, health and schools as per NYT.

The total for these "humanitarian" programs would rise to $245 million because of the redirected funds. But that left $300 million in aid owed to the Palestinians suspended pending further review.

State Department officials said they were suspending $300 million partly because there were not enough organizations in the West Bank and Gaza to carry out programs. Officials said no American money would be given to the executive branch of government led by the Palestinian president, Mahmoud Abbas, who has criticized the Hamas leadership for failing to reach out to Israel.

The decision on Mr. Abbas was a surprise, because American officials had earlier said that they were looking for ways to circumvent Hamas and support him directly. While the American officials gave no reason for the decision, they indicated that he had not established control over security forces and border crossings to justify giving him aid.

Supporters of Israel in Congress told the administration they would object to money going to Mr. Abbas. Asked if Mr. Abbas might eventually receive American aid for these purposes, C. David Welch, the assistant secretary of state for the Middle East, said: "Not now. But I don't rule it out, and I don't rule it in."
Mr. Welch said that, mirroring the American actions, the "broad trend" of European governments had been "supportive of the direction that we are going in" of cutting off aid to day-to-day Palestinian operations but letting money flow for "humanitarian" purposes.

The European Union's foreign ministers were to meet Monday in Luxembourg to discuss how to carry out their cutoff, but a spokeswoman said on Friday that the outlines of what it would do were already clear.

"We are not authorizing any payments that go to the Palestinian Authority or through the Palestinian Authority," said Emma Udwin, the spokeswoman for the European Union's executive branch.