MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host:

And I'm Robert Siegel. Today, defiance from the Palestinian Islamist movement Hamas, and denials from the White House and the Israeli embassy in Washington. Those were reactions to a New York Times story out of Jerusalem. The Times reports that the United States and Israel plan to starve the Palestinian Authority of aid and tax funds once Hamas takes over. The idea would be to deprive Hamas, which does not recognize Israel and which won a majority in the Palestinian parliament, of public support. That would theoretically hasten the defeat of Hamas in new elections. At today's White House briefing, spokesman Scott McClellan said this:

Mr. SCOTT MCCLELLAN (U.S. Press Secretary): I saw the news reports earlier today about some sort of plan that was talking about forcing Hamas from power so that there could be new elections. I mean, there is no plot, there is no plan.

SIEGEL: Well, the reporter who wrote that story for the New York Times, Steven Erlanger, is on the phone with us from Jerusalem now, and, Steve Erlanger, is there a plan, a U.S.-Israeli plan to starve the Palestinian Authority of funds and destabilize a Hamas regime?

Mr. STEVEN ERLANGER (New York Times): Yes, there is such a plan, but it's not a plot. It's relatively overt. Both Israel and the United States have made it very clear that once Hamas takes over control of the Palestinian Authority, and Hamas has made it also very clear that it doesn't accept the right of Israel to exist, it is refusing to disavow violence and it's refusing to accept previous agreements, then there's going to be a very difficult time providing the cash the Palestinian Authority needs to pay its workers. So there's going to be an economic crisis in any case. The hope is that there will be such a chaos that the president of the Palestinian Authority, Mahmoud Abbas, will feel forced to call new elections in the hope that the Palestinians will reject Hamas and bring back to power a chastened and reformed Fatah movement.

SIEGEL: There are a lot of assumptions there, and, while this is really all about Hamas, the assumption is that Fatah would be chastened and reformed in the interim.

Mr. ERLANGER: Well, as one official said to me, the confrontation is coming. The question is whether it will come at a point where Fatah has gotten its act together but not come so late that Hamas has entrenched itself into power. This is a very risky position that the Americans have, because on the one hand they don't want to be seen to be hurting the Palestinian people, who, after all, made their own democratic choice, but at the same time they want to make sure that Hamas either accepts the basic assumptions of the last 20 years of diplomacy, which include Israel's right to exist, or that Hamas does not stay in power in the Palestinian Authority.

SIEGEL: Now, there seem to be three components, Steve, of funding here that are at issue. One of them is U.S. aid, and the U.S. aid -- well, it would be more newsworthy if the U.S. said it would continue to aid Hamas if it took over the government of the Palestinian Authority. There's also Israeli collection of Palestinian tax receipts. I'd like you to explain that. How much money is at stake, and what is supposed to happen with that money?

Mr. ERLANGER: Under the Oslo agreements, which Hamas rejects, Israel collects taxes and customs duties on behalf of the Palestinian Authority which it then transfers to the Palestinian Authority. Now, Israel has said since Hamas is a terrorist organization and rejects the Oslo agreements and rejects Israel's right to exist, it is going to take that money as soon as Hamas takes power and not give it to the Palestinian Authority. It will not fund terrorism, but put the money into escrow. The Palestinian Authority will then have a deficit of more than one billion dollars in cash a year that it cannot fund without outside assistance.

SIEGEL: Steven Erlanger, of the New York Times, in Jerusalem, thank you very much.

Mr. ERLANGER: Thank you. Transcript provided by NPR, Copyright NPR.