France joins EU in pledging aid to Palestine

"The Palestinian Authority cannot pay the salaries for the month until the Israeli government transfers the money," he told journalists.

Israel announced the suspension of tax revenue transfers earlier this month, following the signing of a Palestinian unity agreement between Fatah and rival Islamist group Hamas in Cairo on 4 May.

In Paris, French foreign ministry spokesman Bernard Valero criticised the Israeli move, describing the Palestinian Authority's "right" to have access to the funds.

Shortly after the Cairo deal was announced, Israel called on the European Union to cut its funding to the Palestinian Authority if Hamas does not recognise Israel and "renounce violence".

But Brussels last week said last it would provide an additional €85 million in aid to the Palestinian Authority after Israel blocked the transfer of tax revenues, a controversial move that has also sparked criticism at home.

Valero hailed the EU decision on Monday. "We consider that the current Palestinian government, under the leadership of Salam Fayyad, has presented all the necessary guarantees of transparency in public finances and good use of international aid," he said.

"We expect that any future Palestinian government will maintain these guarantees."

Europe has traditionally been divided over how best to tackle the Israeli-Palestine peace question, with French President Nicolas Sarkozy indicating that Paris may recognise an independent Palestinian state later this year.

"If the peace process is still dead in September, France will face up to its responsibilities on the central question of recognition of a Palestinian state," Sarkozy said in an interview with L'Express earlier this month.

"The idea that there is still plenty of time is dangerous. Things have to be brought to a conclusion [before a UN gathering in September]."

Germany, meanwhile, has stressed that it will not recognise a Palestinian state without Israel's acceptance.

The question has become more pertinent following the surprise signing of a unity deal between the main Palestinian factions on 4 May, after many years of bloody infighting between themselves.

Brokered by the new post-Mubarak Egyptian government, question marks remain as to whether the deal will last however, with a similar accord struck in February 2007 in Mecca quickly unravelling.