U.S. to lift sanctions on new Abbas government

By Wafa Amr

JERUSALEM (Reuters) - The United States plans to lift a ban on direct aid to the emergency government that Palestinian President Mahmoud Abbas is forming following Hamas's takeover of the Gaza Strip, Washington's envoy said on Saturday.

Abbas ordered the Hamas-led government disbanded on Thursday after the Islamist group's bloody takeover of the Gaza Strip. Hamas said Abbas's order amounted to a coup and that Prime Minister Ismail Haniyeh, a Hamas leader, remained in power.

"I think ... there won't be any obstacles, economically and politically, in terms of reengaging with this (Abbas-appointed) government. Yes, they will have full support," U.S. Consul-General Jacob Walles told Reuters in an interview.

Walles said Washington and its partners in the Quartet of Middle East mediators -- the European Union, Russia and the United Nations -- will make announcements next week about lifting the economic sanctions that have been in place since Hamas came to power in March 2006.

In a statement, the Quartet voiced support for Abbas and concern about humanitarian conditions in Gaza but did not say whether it would ease its ban on direct aid to the Palestinian Authority.

Walles said the Bush administration wanted to start providing "significant" financial assistance to the Palestinians, both for economic development and for Abbas's security forces.

"It's premature to get into details right now," he said.

Senior Israeli officials said Prime Minister Ehud Olmert and U.S. President George W. Bush would discuss at a meeting next week a series of "gestures" they planned to take, including the release to Abbas of a portion of the Palestinian Authority's tax revenues being withheld by Israel.