US freezes the assets of groups 'linked to Hamas'

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The US broadened its solidarity with Israel by freezing the assets of three organisations it says are linked with Hamas, the extremist group that claimed responsibility for the weekend suicide bombings in Israel.

A day after he gave Israel the green light to take heavy retributive action against Palestinian targets, President Bush appeared with his Treasury Secretary and Attorney General in the White House Rose Garden to announced the latest measures, the third of their kind to target financial groups said to be linked with terrorism.

Hitherto, Washington has taken aim at banks and alleged front organisations for the al-Qa'ida network of Osama bin Laden. Now the explicitly Palestinian group Hamas is in its sights. Hamas, Mr Bush said, was seeking the total destruction of Israel: "Those who do business with terrorists will do not business with the US or anywhere the US can reach."

The President was speaking shortly after the Treasury and Justice Department froze the assets of the Texas-based Holy Land Foundation for Relief and Development, and FBI agents raided its offices in four states to seize documents.

At the same time, Paul O'Neill, the Treasury Secretary, calling Hamas "an organisation of global reach," announced a freeze on the assets of two financial concerns based in Palestinian territory – the Al Aqsa International Bank and Beit el-Mal Holdings, a holding company which has a large stake in Al Aqsa.

According to senior officials, the Administration had planned to unveil the crackdown later in the month as part of an internationally co-ordinated extension of its anti-terror campaign, but moved the date forward after the weekend suicide attacks in Haifa and Jerusalem, in which 26 people died.

The move is a sign of Washington's exasperation with the inability – unwillingness, many here would say – of Yasser Arafat to bring to book the planners of the attacks. Its anger has been increased by their timing: the very moment Colin Powell, the Secretary of State, has embarked on the Administration's first major initiative in the conflict by sending retired General Anthony Zinni to try to mediate a ceasefire.

Those hopes now lie in ruins, leaving General Powell to warn the Palestinian leader that this is his "moment of truth" to show he is sincere about wanting peace. David Ivry, Israel's ambassador to the US, declared yesterday that even the seven-day period of calm that Prime Minister Ariel Sharon had demanded as a precondition for restarting negotiations was off the agenda.

After the bombings, said Mr Ivry, the new test was whether Mr Arafat arrested militants and dismantled the infrastructure of Hamas and its sister group, Islamic Jihad. "It's no longer a question of seven days. The question is whether Arafat is going to start responding to terror," he told the Washington Institute for Near East Policy.

Despite its harsh language, the signs were that Washington has not quite reached the point of ditching Mr Arafat – if only because no obvious alternative exists. But it has dropped any mention of restraint in its public response to the retaliatory measures taken by Mr Sharon.

What difference the financial measures will make is unclear. From the West Bank town of Nablus, Hamas retorted by claiming it did not take money from abroad. "Hamas is funded by the Palestinian people here, not by foundations based in America or anywhere else in the world," a spokesman said.

The Holy Land Foundation, which raised $13m last year for Muslim causes and is classified as a charity, rejected charges that it was linked to terrorism. It said that the decision to seize donations during the holy month of Ramadan was "an affront" to Muslim Americans.

Al Aqsa International Bank was set up four years ago with a starting capital of $20m, US officials said. It is owned by the Jordanian Islamic Bank and Beit el-Mal, which was banned by Israel in 1998 on the grounds that it was linked to Hamas.