WASHINGTON — The Bush administration is set to push for an end to the ban on direct American funding of the Palestinian Authority, according to congressional sources.

The White House intends to ask Congress to allow transferring of American financial aid directly to the Palestinian Authority, rather than the current practice of funneling funds to nongovernmental organizations through the U.S. Agency for International Development, congressional sources said.

Administration officials confirmed that Bush’s foreign policy advisers will talk to Congress about changing the way in which financial assistance is delivered to the Palestinians, as well as discuss the possibility of increasing the $70 million in annual U.S. aid that is currently spent in the territories.

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Congressional legislation banning direct transfer of U.S. funds to the Palestinian Authority was enacted piecemeal since 1994 to ensure that American dollars do not end up supporting Palestinian violence against Israel.

The proposed change in the way aid is supplied to the Palestinians represents far more than a technical shift in accounting: Just months ago the administration was seeking to bypass the Palestinian Authority; now it will be pushing to fund it. The U.S. government went from viewing the Palestinian Authority as a corrupt, untrustworthy apparatus, marred by terrorism, to a financially-transparent, responsible partner in the peace process.

The theme was sounded by a senior administration official to reporters on board Bush’s plane returning from the Middle East last week: “The emergence of an accountable Palestinian leadership that has put in place a finance minister, and transparency and accountability measures that I think are starting to give people confidence that the money would be used for what its intended to be used for is another one of those new conditions that we’re going to want to take a look at.”

The proposed changed in policy comes in response to a request from the Palestinian finance minister, Salam Fayyad, when he met with Bush in the White House two weeks ago, well-placed Washington sources said. Fayyad, who previously represented the International Monetary Fund in the West Bank and Gaza, reportedly forged an immediate rapport with Bush.

Fayyad’s cooperation with Ernst & Young and Deloitte & Touche, the two financial consulting companies hired by the United Nations and the United States government, respectively, to audit the Palestinian Authority’s finances, has earned him broad praise.

Fayyad reportedly asked the president to supply the annual $70 million in aid directly to the reformed authority, and to supply some back payments, currently held in a U.S. bank account pending USAid tenders.

According to congressional legislation, USAid issues tenders for development projects in the West Bank and Gaza, and then accepts bids from nongovernmental organizations to execute the projects. Due to various reasons, not all tenders have been executed, and therefore not all the money has been spent. Sources say that approximately $200 million of Palestinian aid has accumulated in USAid accounts in recent years.

According to members of Congress and their aides, the administration has a good chance of obtaining congressional approval for the proposed policy shift.

Rep. Gary Ackerman, a New York Democrat and the ranking minority member of the House of Representatives subcommittee on the Middle East, told the Forward that the United States “should put its money where its policy is” and support a new, reformed Palestinian leadership financially, as well as politically.

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