( AP ) - The emergency government that Palestinian President Mahmoud Abbas installed after Islamic militants seized control of Gaza reaped its first windfall on Monday, with the European Union promising to restore hundreds of millions of dollars in crucial aid.
The EU traditionally has been the Palestinian Authority's largest donor, and the reinstatement of aid, cut off after the Islamic Hamas movement took power 15 months ago, could signal the beginning of the end to a crippling international boycott.
On Sunday, Abbas hurriedly swore in the new Cabinet, days after dissolving the unity government in response to the Islamic group's violent takeover of the Gaza Strip.
The rift has left the Palestinians with two rival governments - a Fatah-allied government in the West Bank and the Hamas leadership in Gaza. Abbas seeks peace with Israel, whereas Hamas is sworn to the Jewish state's destruction.
Underscoring the convoluted political solution, the dueling Palestinian Cabinets were holding separate meetings in the West Bank and Gaza on Monday. The dispute has endangered the Palestinians' goal of forming an independent state in the two territories, which are located on opposite sides of Israel.
The international community has largely rallied behind 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.
"We absolutely have to back" the new government in the West Bank, said Luxembourg Foreign Minister Jean Asselborn. "The question of today is: How can we help the 1.4 million people in Gaza?"
Riyad al-Malki, the new Palestinian minister of information and justice, welcomed the announcement.
"There are encouraging steps. We hope that these steps will be carried out quickly," he said.
Both the Haniyeh and Fayyad governments profess to represent Palestinians in both the West Bank and Gaza. To drive home that point, al-Malki said the EU aid also would go to pay salaries for government employees in Gaza.
"We will work to secure all basic needs for our people in Gaza," he said before the Cabinet meeting in the West Bank town of Ramallah.
The United States, another major donor to the Palestinians, has said it will end its financial embargo, while Israel has signaled that it too will ease sanctions on the Palestinians. Israel collects some $55 million a month in customs duties on behalf of the Palestinians, but has withheld the funds since Hamas took power.
The stark division between Gaza and the West Bank since Hamas' lightning takeover of Gaza has raised grave questions about the ability to stave off a humanitarian crisis in Gaza. Both Israel and Egypt have sealed off the area's borders.
In Gaza, panicked residents continued to stock up on basic supplies, fearing growing shortages of food, fuel and other staples.
Some of those fears were alleviated after the sole provider of gasoline to Gaza, Israeli company Dor Alon, renewed shipments cut off last week during the heavy fighting.
Israeli Foreign Ministry spokesman Mark Regev said Israel was aware of the humanitarian dangers facing the Gaza Strip. But he said Israel had not yet figured out a way to deal with the Hamas rulers of Gaza.
Both Israel and the United States already have said they would work to bolster Abbas, while isolating Hamas. The U.S., EU and Israel consider Hamas, which has killed hundreds of Israelis in suicide bombings, a terrorist group.
In New York, Israeli Prime Minister Ehud Olmert said Sunday that his country would be a "genuine partner" of the new Palestinian government and promised to consider releasing hundreds of millions of dollars in frozen tax funds.
And the top U.S. diplomat in Jerusalem, Jacob Walles, said Sunday that Washington would fully support Abbas' new government and resume aid.
Meanwhile, Abbas on Monday dissolved the National Security Council in a further bid to weaken Hamas.
The council was formed as part of the governing alliance Hamas and Fatah set up in March, in a bid to divide security responsibilities between the factions. But disputes over control of the powerful security forces were never resolved, and the council never met.
Also Monday, about 300 Gazans remained trapped at the Erez border crossing with Israel, hoping to escape Hamas rule, Israeli officials said. Nervous pro-Fatah security officials at the border ordered cameramen not to film their faces, as children slept on their mother's laps and on the floor.
Israel said it was only letting the staff of international organizations, people with special permission and humanitarian cases to cross. The restrictions have created a chaotic scene at the terminal.
"We want to enter Israel. If they don't, Hamas will slaughter us," an old woman screamed hysterically in footage aired Sunday by Israel's Channel 2 TV.
"We believe these 300 are not in danger and they can go home," military spokesman Shlomo Dror said Monday. "Some of them are Fatah, but Hamas is not killing all the people from Fatah. It is only trying to catch people who are very dangerous."