Mahmoud Abbas has warned of social and economic catastrophe if the European Union does not restore financial aid to the Palestinian Authority.The Palestinian president was speaking in Helsinki after talks with his Finnish counterpart Tarja Halonen – Finland are the next holders of the rotating EU presidency. Abbas said Palestinians were “crying out” for the aid suspended by the European Union in the wake of Hamas’s election victory. But Halonen reaffirmed Europe’s insistence that Hamas renounce violence, recognise Israel and respect previously signed peace accords. Meanwhile Israel’s acting prime minister Ehud Olmert has agreed a coalition deal with Labour leader Amir Peretz. Peretz is set to secure the Defence Ministry posting that he was after and the breakthrough means a new government could be announced as early as next week. However Olmert’s Kadima party is still seeking more partners for a broad-based coalition designed to establish a comfortable working majority in the 120 seat Knesset.