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U.S. proposal links Palestinian aid to halting U.N. push

By Susan Cornwell

WASHINGTON (Reuters) - Congress would allow American economic aid to the Palestinians to continue next year so long as Palestine is not admitted as a state to any more United Nations organizations, under a proposal released on Thursday.

The measure pending before lawmakers would appear to give the Palestinians a pass on the U.N. organization they have already joined -- the United Nations Educational, Scientific and cultural Organization (UNESCO).

It also says that the Palestinian mission in Washington can remain open so long as Palestine is not admitted to a single additional United Nations entity.

The proposed spending plan was released by congressional Republicans, who say it was agreed between Republican and Democratic appropriators as a spending plan for fiscal 2012. Their agreement has until now been kept secret.

It was unclear how soon a vote would be held, or whether details of the plan would change. Republicans are pushing for a vote as soon as possible.

The plan does not specify any particular amount of aid for the Palestinians for fiscal 2012, apparently leaving it to the Obama administration to set the level in consultation with Congress.

"The bottom line is that U.S. aid to the Palestinian Authority can continue, which is good news," said Dylan Williams, director of government affairs at J Street, a liberal advocacy group in Washington that says a two-state solution is essential to Israel's survival.

J Street argues that continuing U.S. aid to the Palestinian Authority in the West Bank benefits Israel's security. "That is because the alternative to the Palestinian Authority being able to assist Israel in maintaining order, and provide basic services to the Palestinians, is for extremist groups like Hamas to deliberately destroy that order and take control of the West Bank," Williams told Reuters.

The Anti-Defamation League's national director Abraham Foxman said he thought the proposed restrictions on aid to the Palestinian were "fine," because they were prospective, not retrospective.

"It does not punish them (the Palestinians) for what they did" in seeking membership at UNESCO, he told Reuters. But the language makes clear that "if you act on a similar fashion from now on, there will be consequences" from the United States.

The Palestinians' campaign to gain recognition as a state at the United Nations and its organizations has upset Israel and its main ally, the United States, who say only a peace treaty can establish a universally recognized Palestinian state.

But the Palestinians pushed ahead and won admission to UNESCO in October, a move that prompted the United States to cut off funding to that agency. U.S. lawmakers also responded by holding up millions of dollars of aid already appropriated in 2011 for the Palestinians but not yet spent.

Palestinian President Mahmoud Abbas, who hoisted the Palestinian flag at UNESCO headquarters in Paris on Tuesday, has said the Palestinians plan to apply to 16 other international organizations for membership.

The fiscal 2012 spending plan says that no U.S. economic aid can go to the Palestinians "if the Palestinians obtain, after the date of enactment of this act, the same standing as member states or full membership as a state in the United Nations or any specialized agency thereof, outside an agreement negotiated between Israel and the Palestinians."

It would allow Secretary of State Hillary Clinton to waive the restriction if she can certify to lawmakers that this would be in U.S. national security interests, and report to them on how continuing the U.S. aid would further Middle East peace.

The leader of another prominent American Jewish group, the American Jewish Committee, offered a mixed review of the proposal.

"On the one hand, we understand the sentiment in Congress on sending a clear message that any unilateral act will have immediate and direct consequences for Palestinian aid. On the other hand, it is important that any such decision not prove counterproductive regarding the balance of forces in Palestinian society, nor should it negatively affect security cooperation between Israel and the Palestinian Authority," AJC Executive Director David Harris told Reuters.

Last year Congress appropriated $400 million in economic aid and $150 million in security aid to the Palestinians. Representative Kay Granger, a Republican, still has a hold on $138 million of the 2011 economic aid because of the Palestinian push for recognition at the United Nations. She is the chairwoman of the House subcommittee on foreign aid.

(Editing by Cynthia Osterman)

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