Italian Prime Minister Romano Prodi said on Sunday there was a need for dialogue with Hamas to help the Palestinian Islamist group develop politically.

Meanwhile, the UK Commons foreign affairs select committee said in a report published on Sunday that the isolation of Hamas, even after it agreed to form a national unity government with Fatah in February, had been “counterproductive” and the EU’s unwillingness to provide direct aid for the Palestinian Authority “very damaging”, The Financial Times reported.

The United States and the European Union describe Hamas, which has led a Palestinian uprising against Israel for almost seven years, as a terrorist group.

"Hamas exists. It's a complex structure that we should help to evolve -- but this should be done with transparency," Prodi said at a conference in central Italy.

"One must push for dialogue so that it happens, and not shut anyone out of dialogue."

A Prodi spokesman said the prime minister's comments in no way suggested a break with European Union policy on Hamas, or that it be brought into negotiations between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas.

The aim of having a channel open, the spokesman said, was to encourage moderation and avoid dividing the Palestinians.
"But the difference is between negotiations and dialogue. The negotiations between Abu Mazen (Abbas) and Olmert will go ahead," Prodi spokesman Silvio Sircana told Reuters.

"At the same time, you cannot close any possibility of dialogue with Hamas because one must try to bring it along to a more moderation position."

Hamas, which won Palestinian elections in January 2006, seized control of the Gaza Strip in June after routing forces loyal to Abbas's secular Fatah faction. Since then, Gaza's main crossings have been closed to all but humanitarian supplies.

The US and Olmert have sought to isolate Hamas in Gaza while increasing cooperation with Abbas and the Western-backed government he appointed in the occupied West Bank, where Fatah is dominant.
Prodi said he had already warned Olmert and Abbas against seeking peace with only some Palestinians.

"I told the two political leaders that there cannot be a peace with Palestinians divided and even they understand that," he said. At the same time, Sircana said Italy strongly supported talks between the two leaders.

Last month, Israel's ambassador to Italy expressed indignation after Italy's foreign minister said Hamas should not be isolated since it had won democratic elections.

Hamas says it will not formally recognise Israel and its 1988 charter calls for the destruction of the Jewish state.
Hamas leaders have offered a long-term truce with Israel in return for a viable Palestinian state in the occupied West Bank and the Gaza Strip.

In a stinging indictment of the west’s approach to the Middle East peace process, a committee of MPs concluded that the international community was partly responsible for the violent clashes between Fatah and Hamas militants in the Gaza strip in June, The FT reported on Sunday.

The isolation of Hamas, even after it agreed to form a national unity government with Fatah in February, had been “counterproductive” and the EU’s unwillingness to provide direct aid for the Palestinian Authority “very damaging”, the UK Commons foreign affairs select committee said in a report published on Sunday.

As part of the EU, the UK has demanded that Hamas renounce violence, recognise Israel and abide by the terms of past agreements before contacts can be established. These three principles were drawn up by the International Quartet on the Middle East – made up of the EU, the US, Russia and the United Nations – in the wake of Hamas’s victory in Palestinian legislative elections in January last year.

“We have made it clear that we will respond to significant movement by Hamas,” said the UK foreign office. “We have not said that we will never talk to Hamas but there have to be ground rules. That’s what the Quartet principles aim to provide and are no more than was demanded of the Palestinian Liberation Organisation in the 1990s as the essential basis for progress.”

But the cross-party panel of MPs calls for the government to “urgently consider ways of of engaging politically with moderate elements within Hamas”.

It adds that any attempt by the international community to ignore Gaza, which Hamas has controlled since June, and pursue a “West Bank first policy” would “risk further jeopardising the peace process”.

Referring to the events of June, which led to the break up of the national unity government, the report says that while the actions of both sides in Gaza were “deplorable”, the refusal of the international community to lift its boycott of Hamas “meant that this government [the national unity government established by the Mecca agreement] was highly likely to collapse”.

Under the policy embarked on by the EU in the wake of Hamas’ 2006 election victory, the bloc delivered more than €600m ($820m) in aid to the Palestinians last year but avoided giving financial support to state institutions controlled by the Palestinian Authority.

Nevertheless, EU officials have often betrayed misgivings about the 2003 decision to put Hamas on the EU’s terrorist list. Last September, Finland, then the holder of the EU’s revolving presidency, floated the idea of eventually talking to Hamas, while Javier Solana, its foreign policy chief, told ministers behind closed doors: “We will have to speak to everyone, sooner or later.”