With the Palestinian economy lurching toward the breaking point, Israeli officials said Wednesday that they would not oppose a decision by Middle East peacebrokers to resume financial aid to the Palestinian Authority (PA), even though its government is controlled by Hamas.
But the decision Tuesday by the Quartet - the US, the United Nations, European Union, and Russia - to release international aid that has been held since Hamas's election in January is already facing challenges.
While the donor countries want to alleviate suffering and help prevent a total financial breakdown in the PA, most - in particular, the US - say they remain committed to keeping funds out of the hands of Hamas.
"As far as we are concerned, the Quartet's decision to give further humanitarian support to the Palestinian Authority, bypassing the Hamas government, is definitely OK," Foreign Minister Tzipi Livni said in an interview on Israel's Army Radio.
Ms. Livni's statement indicated that Israel is willing to accept the fine-tuning of definitions being tested out by the international donor community. This latest plan is intended to separate humanitarian aid from direct budgetary assistance that has been given in the past, which was used to pay salaries of government employees.
As of Wednesday, however, US officials were unsure whether the release of funds would include funding for PA salaries, and pointed out that the statements after Wednesday's Quartet meeting left out all mention of the issue.
"One of the main interests is that the funding not go to Hamas, because that would in fact be a legal problem, at least for us," says Stuart Tuttle, the spokesman of the US embassy in Tel Aviv.
"Hamas is designated as a terrorist organization, and to fund it is in violation of US law. The EU has the lead on this mechanism and how it will function ... but obviously there will be close consultations with them to make sure that it is maintained," he says.
The dilemma over salaries is key - and lack of ability to pay them is where average people are feeling the crunch. And yet, getting them paid without having the money cycled through Hamas-run offices looks to be a complicated task. The PA has some 165,000 salaries to pay, from teachers and healthcare workers to sanitation staff and policemen.
Nasser Taboub, general manager of Al Aqsa Islamic Bank, says paying salaries requires cooperation of at least two offices under Hamas's control. The personnel bureau under Hamas Prime Minister Ismail Haniyeh'soffice knows what civil servants are eligible and how much they are owed, while all of the details related to the bank accounts, transfers, reconciliation, and allocation is located in the Hamas-controlled finance ministry.
"If they want to change the name [of the finance ministry] they can, but this is just a political gimmick," says Mr. Taboub.
At the moment, he adds, "I don't think anyone has a full idea of what the mechanism will be. I don't think anybody has developed it yet, but all options are open. It's now a test of political will.''
The easing of what was becoming something akin to a boycott of the PA puts the US - seen by Palestinians as leading the campaign against financial ties to Hamas - in a particularly complex position.
While the US wants to make sure that it helps on a human level, Mr. Tuttle says, it also wants to be wary of the message it sends to Palestinian voters and the Hamas-led government.
"Our interest in this is to be able to meet the humanitarian needs of the Palestinian people, and that is one of the priorities of the US," says Tuttle, pointing out that the US Agency for International Development (USAID) also announced Wednesday it was giving $10 million in medical assistance.
"That's an example of the type of thing that we want to be able to do for the Palestinians. What we don't want ... is that the international community is seen as stepping in and taking responsibility for things that should be the responsibility of the PA."
He adds: "The PA, even if it's led by Hamas, needs to take responsibility for its people and for the consequences of its decisions."
In a statement issued by the Hamas-led government, Palestinian officials were less welcoming than Israel of the concept implicit in the deal: that funds would be sent with the intention of circumventing Hamas. "We were hoping that their decision could be more positive in dealing with the Palestinian government since it is an elected government that represents the Palestinian people," the statement said.
Mr. Haniyeh said the conditions of the aid seemed aimed at pushing the Palestinian government to "make concessions that harm [Palestinian] rights" and "give the [Israeli] occupation legitimacy," Reuters reported.
• Joshua Mitnick contributed from Tel Aviv.