European Union foreign policy chief Catherine Ashton raced to assure Palestinian Authority officials they were still on the EU dole.
“Ashton informed Abbas that the EU projects to the PA and the Palestinians which are carried out in the Palestinian Territories, won’t be frozen due to the PA Leader move at the UN,” the Arabic-language Al-Quds newspaper reported, citing sources close to PA chairman Mahmoud Abbas.
Ashton's assurances come on the heels of reports the United States Congress was blocking the transfer of $200 million to cash-strapped officials in Ramallah due to Abbas' statehood gambit at the United Nations.
The Congressional freeze for the latest block of US aid dollars - which total an average $600 million per annum - was first reported on Saturday by the UK-daily The Independent.
The report remained unconfirmed until Monday, when US Secretary of Defense Leon Panetta criticized the Congressional move during a Tel Aviv press conference with Israeli counterpart Ehud Barak.
"The administration opposes holding these funds from the Palestinians," Panetta said, insisting the funds have helped improve Israel's security.
"This is a critical time and it is not a time to withhold those funds," he said.
PA Minister of Planning Ali Jirbawi told the PA-run WAFA news agency that the US Congress's decision to halt US aid to Ramallah has not yet been issued to Palestinian officials, but played down the significance of such a move.
"The Palestinian Authority is fully ready to embody the reality of a state," Jirbawi said, insisting there was a difference between financial crisis the PA faces and its readiness for statehood.
However, Jihad al-Wazir, the PA's top monetary official, warned last month that a cessation of foreign aid from the United States could lead to fiscal ruin and collapse for Ramallah
The Arab League on Sunday asked its member states to increase financial help to the Palestinians after the reported US block on the transfer of funds, AFP reported.
The Arab League's chief called the bolstering of financial aid necessary for the Palestinians to "face this threat."