GAZA CITY, 9 April 2006 — Despite aid cuts that are pushing the Palestinian Authority to financial collapse, Prime Minister Ismail Haniyeh remained defiant and said yesterday that his government would not bow to foreign pressure to recognize Israel and disavow violence.

As Haniyeh stood firm on his refusal to moderate the policies of his militant Hamas movement, Israel stepped up pressure with a second deadly air attack against fighters in two days. Two Palestinians died as they drove in their car.

Since taking office last week, Haniyeh has faced violence with Israel which prompted vows of revenge by Hamas’ armed wing as well as a clash with the international community over aid and tension with President Mahmoud Abbas over his powers.

The United States and the European Commission suspended direct aid on Friday to Haniyeh’s new Hamas-led government until it renounced violence, recognized Israel’s right to exist and supported internationally backed Middle East peace initiatives.

“The attempts to strangle the government has one aim,” Haniyeh said. “(But) they will not extract political concessions from us that will harm the rights of the Palestinian people,” he said at the opening of a children’s art exhibition in Gaza.

Hamas, a movement that is sworn to Israel’s destruction and has carried out many suicide bombings, won a sweeping victory in parliamentary elections in January.

In the latest strike yesterday, Israel fired a missile at a car ferrying Palestinians back after firing rockets into the Jewish state, killing two Al-Aqsa Martyrs Brigades fighters. Gaza gunmen have increased rocket attacks in recent months.

Palestinian Authority Cabinet spokesman Ghazi Hamad said Israel’s attacks would “not change the positions of this government.” On Friday, in the deadliest strike in five months, missiles hit a car leaving a training base in the southern Gaza Strip, killing five fighters and the five-year-old son of one of them who came to watch his father train.

Khaled Abu Hilal, a spokesman for the Hamas-controlled Interior Ministry in charge of security matters, said he supported calls by Hamas’ armed wing, which has largely abided by a truce since March 2005, to avenge the airstrike.

“Our people have the right to keep the arms of resistance and to respond to the aggression,” he told reporters. “We understand the need of our fighters for training bases to rebuild themselves. We will secure that,” he added.

Haniyeh and Abbas failed to resolve a dispute over powers in late night talks on Friday over Abbas’ decisions this week to assume control of Gaza’s border crossings and make a high-level security appointment.

In an interview with Britain’s Guardian newspaper, Abbas said any attempt by Israel to unilaterally set its borders would delay rather than bring a resolution to the conflict.

“After 10 years our sons will feel it is unfair and they will return back to the struggle,” he said.

Despite the aid cuts, the United States said in its announcement in Washington it would boost humanitarian assistance to the Palestinians through UN agencies to avoid widespread economic distress in the West Bank and Gaza Strip.

The cuts have left Haniyeh’s new government scrambling to find ways of paying 140,000 workers employed by the Palestinian Authority who support about a third of the 3.8 million population in the territories.

Even before the aid cutoff, many Palestinians struggled to subsist in an economy suffering from widespread poverty, high unemployment and rife with corruption.

Hamas has appealed to Arab states and Iran to fill the shortfall, but has not even been able to find a bank willing to handle its finances.

The EU has been the main donor to the Palestinian Authority since its creation under the 1993 Oslo peace accords.

Abbas appealed to the European Union not to suspend aid to the Palestinian Authority, predicting “Hamas will change” its attitude to Israel.

Interviewed in the French newspaper Le Figaro, Abbas insisted that Hamas needed time to convince its membership about change toward Israel, and “we shall allow them this time.” He also again called on the Israeli government to negotiate with him. While Hamas may not accept any negotiated compromise, “we shall be organizing a referendum” and this would produce “the fairest solution.” The appeal followed Friday’s denunciation by Haniyeh of European Union’s aid cutoff.

He vowed to look for other sources of money, and made plain he was not budging from his new Hamas-led Cabinet’s refusal to renounce violence and recognize Israel, saying “we are still sticking to the political platform of the government.” He called the EU’s suspension of direct financial aid and donations to the PA “an impatient, unfair decision, adding: “They are not punishing the government, they are punishing the Palestinian people for their democratic choice.”

— With input from agencies