...The administration is also very concerned by the deteriorating situation in the territories and fear that it could eventually cause the PA to collapse, which Washington views as highly undesirable. Administration officials therefore plan to insist that Olmert present ideas on how to prevent the PA from degenerating into total chaos.

Nevertheless, the current situation also makes Washington even less enthusiastic about funneling aid to the PA, the senior administration official said.

"If Hamas has money to finance its people, who are riding about in cars and brandishing rifles, it should use it to pay teachers and doctors," he said. "Who's paying for their gas?"

"The Hamas government is the one that ought to take care of its workers," he continued. "We have never paid the salaries of Palestinian Authority employees, and there is no reason for us to do so now."

The official insisted that the U.S. and Europe have identical views of the Hamas government.

"All that is being asked of them [Hamas] is three words - yes, yes and yes," he added, referring to the international community's three demands: that Hamas recognize Israel, abandon terror and honor previous Israeli-Palestinian agreements...