The European Union might have been prepared for a strong showing by Hamas in last week's Palestinian general elections. But the bloc was not expecting a full-out victory. And now the EU finds itself uncertain of how to face the winners, despite official statements applauding the Palestinians for a successful election – the first free ballot in 10 years.

The foreign ministers of the EU are convening on Monday to discuss the matter. Their goal is to establish a common line on how to deal with the radical Islamist party, which is registered on the EU list of terror organizations. EU diplomats say time is of the essence, and the Europeans should watch how government building progresses and how the politics of Hamas develops.

If Hamas swears off violence and acknowledges Israel's right to exist, that would be a step in the right direction and a signal that the EU can continue channeling extensive financial aid to the Palestinian Authority without worry. But the ministers have not gone quite so far as to draft concrete demands for the Hamas or to threaten with financial consequences.

In a legal sense, the EU is forbidden from maintaining financial relations with Hamas, ever since the organization was blacklisted as a terrorist group in 2001. Official political contacts are likewise prohibited. The only option the EU has to apply pressure to make sure Hamas disarms and refrains from violence is to stop the flow of aid to the Palestinian territories.

Half a billion euros in aid

Last year the EU headquarters in Brussels handed out some 280 million euros to the Palestinians. Combined with bilateral aid from the 25 EU members, the sum came to over a half a billion euros ($612 million). The EU is the single largest financial backer for the Palestinians, and stopping the flow of much-needed cash could seriously put a dent in Hamas's activities.

On Thursday, the European Union pledged continued support for the Palestinian economy even after Hamas won the legislative elections. So far no strings have been attached to this offer, but the 25-nation bloc has warned that the new government must be committed to peaceful relations with Israel.

Hamas dismisses financial pressure

Hamas, for its part, rejected international pressure calling for the party to disarm or risk losing vital aid for the Palestinian Authority. Senior party leader Ismael Haniyeh threatened to look for alternative sources of financial support in the Arab world if the West cancels its funding.

"This aid cannot be a sword over the heads of the Palestinian people and will not be material to blackmail our people," Haniyeh told Reuters in an interview Saturday. He added that the party, which was sworn to Israel's destruction, was committed to keeping its arms and fighting.

"Hamas has many alternatives (for aid)," the party leader said. "There is much good within our people and we have the Arab world and all those who love the oppressed peoples in the world and who stand beside us," he said without mentioning specific countries to provide aid.

Recognition of Israel

Meanwhile, EU external relations commissioner Benita Ferrero-Waldner called on Israel to cooperate with Hamas if the Palestinian Islamist group renounces all violence. In an interview with the weekly Bild am Sonntag, the Austrian said, "I hope Israel will remain open and be prepared to work with all those who respect the following basic principles: the recognition of the state of Israel and the renunciation of violence."

"There can be no compromise on these principles," she said. "But if there are new opportunities for peace, I hope that Israel will seize them."