Quartet agrees temporary aid for Palestine

"Mindful of the needs of the Palestinian people, the quartet expressed its willingness to endorse a temporary international mechanism that is limited in scope and duration, operates with full transparency and accountability, and ensures direct delivery of assistance to the Palestinian people," a statement said.

The mechanism will initially be activated for three months, and one suggestion on the table is that the World Bank or another major international body could handle the distribution of aid money.

"The goal is to distribute aid to the Palestinian people without going through the Palestinian government," EU foreign policy commissioner Benita Ferrero-Waldner said.

The Palestinian administration was in March taken over by the islamist Hamas movement, which is on the EU and US' lists of terrorist organisations.

EU foreign policy chief Javier Solana said, however, that in some cases, the aid could go to salaries for teachers, nurses and doctors, currently on the Palestinian government's payroll.

The Palestinian authority has been in a financial quandary since Hamas came to power, with both the EU and the US freezing aid payments over the new government's failure to renounce violence and recognise Israel's right to exist.

As a result, over 165,000 Palestinian public sector workers have not been paid for more than two months, causing schools and hospitals to suffer and leading to severe shortages of medicine and food in the region.

European leaders have expressed fears that the shortages could create violent riots and further instability in the region, and have urged the US to review its hard line against any financial engagement with Hamas.

Russian foreign minister Sergei Lavrov said the Palestinians need electricity, medical care, trade and more.

"All this must function for the people not to feel abandoned. I believe everybody understands something must be done," Mr Lavrov said.

In a statement, the quartet also reiterated its grave concern that the Palestinian Authority has failed to commit itself to the principles of non-violence, recognition of Israel, and acceptance of previously-signed agreements, including the so-called roadmap for peace.

Reacting to the outcome of the New York meeting, Hamas signalled on Wednesday it has problems accepting the demands.

"The quartet has conditions. They aim to push the Palestinian government to make concessions that harm [Palestinian] rights, and red lines that give the [Israeli] occupation legitimacy," Palestinian prime minster Ismail Haniyeh told reporters in Gaza.

"The financial crisis has never been a factor dividing the Palestinians. It will be a factor that unites them," he said.