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Hamas will accept funding from Iran: Meshaal -

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(generated from captions) The supreme leader of the Islamic militant group Hamas has told the ABC that the new Palestinian Government will accept financial aid from Iran. In an exclusive interview with Lateline in Damascus, Khaled Mashaal confirmed for the first time it will take up the offer even if it angers the United States and Israel. In January, Hamas swept to power in the Palestinian parliamentary elections, defeating the once-dominant Fatah Party formed by the late Yasser Arafat. But Hamas now faces a predicament - if it does not renounce violence and recognise Israel

its new government could be isolated and bankrupted. Khaled Meshaal has also warned

that the cease-fire involving Hamas and other Palestinian militant groups is under threat from Israeli aggression. Middle East correspondent Mark Willacy reports. From child refugee to political exile, to the supreme leader of Hamas. Khaled Meshaal is often described as an ideological hardliner, a brilliant orator and the architect of a suicide bombing campaign which has claimed hundreds of Israeli lives. And while the new Hamas-led Palestinian Government will be based in the West Bank and Gaza, most of the decisions will be made here in Mr Meshaal damascus headquarters. REPORTER: Khaled Meshaal, thank you for talking to Lateline. Is Hamas still committed to the destruction of the state of Israel? TRANSLATION: We say when Israel actually decides to withdraw from Palestinian land back to the 1967 borders, pulls down the wall, dismantles the settlements, leaves East Jerusalem, acknowledges the right of return for the Palestinian refugees and releases all the prisoners, then we in Hamas will take serious steps to make real peace.

But before that, we will not deal with hypotheticals. So if Israel ends the occupation, would you accept a two-state solution based on the 1967 borders? That is not peace, that is an declaration of war on the Palestinian people. They are still on a large area of Palestinian land. With the wall and the settlements, with the refusal to leave East Jerusalem,

Olmert is repeating the mistakes of Ariel Sharon by announcing war. But for now, the war between Israel and Hamas is being fought largely on the diplomatic battlefield. The Middle East Quartet of the United Nations, the US, the European Union, and Russia has warned that unless the new Hamas-led government renounces violence and recognises Israel, it will be starved of international funds. Instead of buckling to this pressure, Khaled Meshaal has been leading efforts by Hamas to find money elsewhere,

travelling from Tehran to Moscow in search of support. Will you accept money from Iran? We will accept financial support for the Palestinian people from any country in the world. This is our right, but we will never accept any conditional support. However, the Arab and Muslim countries are not putting any conditions on funding. Israel fears that any Iranian aid will be channeled into Hamas's military wing

and the result of that will be more suicide bombs on Israeli streets. But Khaled Meshaal argues that in recent weeks, it's been Israel doing most of the killing. And the Hamas leader warns that continued Israeli aggression could destroy the year-old cease-fire agreed to by most Palestinian militant groups.

TRANSLATION: What we can we do? We calmed the situation down, we are the weaker party, we don't have tanks or fighter planes, we are defending ourselves with very simple weapons. The international community should re-direct its pressure

onto the occupier. Israel's aggression is discouraging us from renewing the cease-fire. This week, Israel's Defence Minister Shaul Mofaz warned that no Hamas leader, however senior, is immune from assassination. Khaled Meshaal knows what it's like to be the target of an Israeli hit squad. Nine years ago, two Mossad agents injected him with poison on a street in Amman. They were caught, and in exchange for their freedom, Israel handed over the antidote in time to save Meshaal's life. We are not afraid of death and I saw death in 1997. This is the picture of Sheikh Ahmed Yassin and Doctor Rantissi and these are more pictures of the martyrs Israel has killed. Israel's killing of these people gets us closer to our victory and will not make Israel closer to theirs. But for now, both Hamas and Israel seem unwilling or unable to move any closer towards peace. If Hamas doesn't renounce violence and recognise Israel, it faces the very real prospect of international isolation and financial crisis. But if it does bow to these conditions, it runs the risk of betraying the very principles

which it won so much widespread Palestinian support in the first place. From here in Damascus, Khaled Meshaal has to find a way out of a very predicament. Mark Willacy, Lateline.