WASHINGTON (Reuters) - U.S. President George W. Bush refused on Thursday to deal with Hamas unless it backs peace with Israel, a decision that could sideline Washington from brokering a settlement after the militant group's Palestinian election win.
Bush also urged President Mahmoud Abbas, whose Cabinet resigned after his Fatah party lost to the Islamist group, to stay in office so the United States could keep open a diplomatic channel with the Palestinian government.
"I have made it very clear, however, that a political party that articulates the destruction of Israel as part of a platform is a party with which we will not deal," Bush told a White House news conference, referring to the group Washington considers a terrorist organization.
Bush, who has made promoting democracy in the Middle East a priority for his second term, had pressed Abbas to hold Wednesday's parliamentary election despite polls showing Hamas would do well.
Hamas had not been expected to win. Its victory could bury any hope of reviving peace talks with Israel soon and stop Bush from achieving his goal of brokering a settlement that creates two states within the next few years.
"Peace is never dead, because people want peace," Bush said.
Bush stepped up U.S. involvement in brokering Palestinian-Israeli accords after Abbas became president last year and sought peace talks with Israel.
With Hamas in power, Bush could revert to the hands-off style that marked his first term, when he believed then-Palestinian President Yasser Arafat was an obstacle to peace.
The United States is perceived by many in the Arab world as pro-Israel and has often been at odds with its Western allies for taking a tougher line toward Palestinian militant groups.
But major mediating powers delivered a unified message to Hamas that it should choose peace with Israel.
"We reaffirmed the view that ... you can't have one foot in terror and the other in politics," U.S. Secretary of State Condoleezza Rice told Reuters after a telephone call between top diplomats from the so-called Quartet -- Russia, the United Nations, the European Union and the United States.
In a statement, the mediators demanded Hamas, which has launched suicide bombings against Israel, renounce violence, accept the Jewish state's right to exist, and disarm.
The major powers did not back up their demands with any threats, such as cutting back aid.
But Rice warned that Hamas will receive no assistance from a Bush administration that has given directly to the Palestinian Authority since Arafat's death.
Hamas is unlikely to overturn its anti-Israel ideology quickly. But it could soften its stance if Western countries cut aid to a government that needs foreign funds to provide basic services for its electorate, political analysts said.
"Everybody understands that the Palestinian people have humanitarian needs. It's a very poor population," Rice said, suggesting U.S. such aid would be funneled through non-governmental organizations.
"We are obviously not going to give aid to a terrorist organization," she added.
David Makovsky of the Washington Institute for Near East Policy said that although Bush pushed for elections, he had failed to bolster democratic institutions that could have helped Abbas' standing.
He doubted the Palestinian leader, who is expected to ask Hamas to form a government, could stay in power long.
(Additional reporting by Steve Holland, Sue Pleming and Carol Giacomo in Washington and Mark Trevelyan in Davos, Switzerland)