WASHINGTON, May 14 (Reuters) - The United States has offered new assurances that providing money to the Palestinian Liberation Organization will not violate U.S. financial sanctions, a senior U.S. official said on Monday. The assurances, he said, were included in an exchange of letters on Monday with the European Union and are aimed at calming bankers' fears and easing the flow of funds to a PLO account controlled by pro-Western Palestinian Finance Minister Salam Fayyad. "We have come to an agreement. This will be an important benefit for Fayyad who is operating that separate PLO account," the senior Bush administration official, who spoke on condition of anonymity, told Reuters. "The letters constitute the assurances they were seeking," he added. But he stressed U.S. financial restrictions on the Palestinian government, which includes the militant group Hamas, would remain firmly in pace. Washington classifies Hamas as a terrorist group. In addition, U.S. citizens wanting to deposit funds into the PLO account would have to get a special license from the U.S. government to do so. A Western aid embargo has been in place for more than a year against the Palestinian government until it recognizes Israel, renounces violence and accepts previous Israeli-Palestinian peace deals.The objective of providing the assurances is to ensure that banks feel comfortable transferring money to the PLO and, in turn, to strengthen Palestinian moderates like Fayyad and President Mahmoud Abbas in their power struggle with Hamas.Banks had been particularly jittery about making transfers to the PLO account since Fatah formed a unity government with Hamas and others in March.Fayyad wants to use the PLO account to receive $55 million that Arab League members promised to pay each month to cover about half the salaries of governmental employees.Government workers have gone without full wages since Hamas came to power in March 2006 following elections that ousted Abbas's Fatah party. Some payments have been made in the past through Abbas's office but only sporadically. The United States has also been trying to boost Abbas militarily and last month the Bush administration got the green light from Congress to spend about $60 million to strengthen his presidential guard and for other security expenses. The money had been held up in Congress over concerns that it could reach Hamas but U.S. Secretary of State Condoleezza Rice submitted a new plan cutting out funds she feared could have reached the "wrong hands." (Additional reporting by Arshad Mohammed)
