Abbas tells Bush it's time to resume Mideast peace talks

GAZA CITY, Gaza Strip -- An emboldened Palestinian President Mahmoud Abbas told President Bush on Monday that now is the time to renew Mideast peace talks, as the emergency government he installed reaped its first windfalls when Europe and the United States promised to restore crucial aid.

Days after Hamas' violent takeover of Gaza, the Islamic militants and Abbas' Fatah are headed in vastly different directions. While Hamas faces deepening isolation, Abbas has received an outpouring of international support.

Bush lent support in a phone call to Abbas, who replaced the Hamas-led Palestinian government after the group seized Gaza. The U.S. lifted its economic and political embargo against the Palestinian government now that it no longer includes Hamas.

The EU traditionally has been the Palestinian Authority's largest donor, and the reinstatement of hundreds of millions of dollars in aid, cut off after Hamas took power 15 months ago, could signal the beginning of the end to a crippling international boycott.

Abbas hurriedly swore in the new Cabinet on Sunday, days after dissolving a unity government between his Fatah movement and Hamas.

The international community has largely rallied behind the Abbas government, led by Prime Minister Salam Fayyad, an internationally respected economist.

In a major boost to Abbas, EU foreign policy chief Javier Solana announced in Luxembourg on Monday that the 27-nation bloc would resume direct financial aid to the Palestinian Authority now that Hamas is no longer part of the government.

Secretary of State Condoleezza Rice said she had informed Fayyad in a phone call of the U.S. decision to end its embargo.

The White House said Bush called Abbas on Monday "to express support for him and the Palestinian moderates."

Abbas told Bush "this is the time to resume the political negotiations and to revive the hope of the Palestinian people," Abbas spokesman Nabil Abu Rdeneh said.

The two men spoke a day before Bush is to meet with Israeli Prime Minister Ehud Olmert in Washington. On Sunday, Olmert said his country would be a "genuine partner" of the new Palestinian government.