By Alastair Macdonald
JERUSALEM, April 27 (Reuters) - The European Union is likely to increase aid targeted at the poorest Palestinians this year because hardships have increased, the EU's aid commissioner said on Friday.
Though he saw signs of "movement" from the ruling Hamas Islamists on EU political demands, Commissioner Louis Michel said the European bloc would maintain its embargo on all but vital humanitarian aid until Hamas meets conditions that include recognising Israel and renouncing violence.
In Gaza, Palestinian Prime Minister Ismail Haniyeh of Hamas again demanded an end to the year-old international boycott that continues despite his formation last month of a unity government with the more moderate Fatah organisation of President Mahmoud Abbas, which Hamas defeated in an election in March 2006.
Michel said he expected the amount of money channelled to Palestinians through the Temporary International Mechanism (TIM) to increase this year.
Set up at the EU's suggestion to soften the impact on the poorest of the anti-Hamas embargo, the bloc allocated 90 million euros ($123 million) in December for distribution through TIM.
"I think it will be increased ... because the needs have increased," Michel said when asked at a news conference in Jerusalem whether further TIM allocations might be larger.
In remarks prepared for delivery to a conference on the subject, he noted total aid to Palestinians from the EU, the biggest donor, had reached 350 million euros in 2006, a substantial increase on the previous year as crisis took hold.
Michel, who met Israeli Foreign Minister Tzipi Livni on his trip, condemned Israeli security measures, including checkpoints and border closures, that he said hurt the Palestinian economy and risked embittering those affected. He also condemned attacks on Israelis and said he understood Israeli security concerns.
He said he believed there was some willingness on the part of Hamas leaders to meet three conditions laid down by foreign donors for a resumption of full funding -- recognition of Israel, renouncing violence and accepting previous peace deals.
"I think there are some moves ... and we must recognise that," Michel said. But he insisted there would be no softening of the EU embargo before the conditions were met. "If we do that, we give a bonus to those who use violence," he said.
Haniye described the embargo by the EU and other foreign powers as "political blackmail" and said his government would not accept it. As on previous occasions he left unclear what action the government might take in response.
Speaking to reporters in Gaza, he acknowledged EU efforts to channel some funds to the poorest Palestinians but added:
"If the embargo continues it will mean there is an international position ... to break the will of the Palestinian people and to force the government to make political concessions, meaning political blackmail.
"The international community must lift the embargo on the Palestinian people, otherwise we will evaluate the entire issue and take a decision to defend Palestinian national interests." (Additional reporting by Nidal al-Mughrabi in Gaza)
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