Withholding funds will cause Palestine to rely on anti-Israeli regimes.  Cutting off aid to the Palestinian National Authority would be counter-productive no matter who is elected in. The PNA would have to replace funding from somewhere, this would inevitably mean turning for aid to Muslim and Arab states, such as Saudi Arabia and Iran as Hamas did. [1] The west may therefore simply force the Palestinians in to the arms of countries that are much more hostile to Israel resulting in the Palestinians simply being more hard-line to please their new paymasters. Allowing the Palestinians to become dependent upon such anti-Israel regimes will end any influence the west has had with the PNA and push it in a more extremist direction. Potentially, such alliances could make a regional conflict more likely.  [1] Watt, Nicholas. “US urges Arab states to fund Palestinians after Hamas victory.” The Guardian. 31/01/2006.