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In Washington, State Department spokeswoman Victoria Nuland said "this money goes to establishing and strengthening the institutions of a future Palestinian state, building a more democratic and stable and secure region.
"We think it is money that is not only in the interests of the Palestinians, it's in US interests, and it's also in Israel's interest, and we would like to see it go forward."
If it is blocked, she added, "the concern would be that the Palestinians would not have the money to fund their police, to fund their civil servants that provide services to continue to strengthen their own security forces, that maintain peace in conjunction with Israel."
Members of the US House Foreign Affairs Committee and the Senate Foreign Relations Committee froze the funding in response to a controversial Palestinian bid to secure full state membership at the United Nations, despite strong opposition from Israel and Washington.
The economic package is separate from security aid, which the US lawmakers say it would be counterproductive to block.
The Palestinian request, which was submitted to the United Nations on September 23, has angered a coalition of pro-Israel Democrats and conservative Republican lawmakers.
Both the United States and Israel insist that only direct negotiations can produce an accord leading to Palestinian statehood.
Panetta, who was on Monday holding talks with Israeli and Palestinian leaders at the start of a trip that will include stops in Cairo and Brussels, said the aid has proved effective and brought "benefits" to Israel and the Palestinians.
The Arab League on Sunday appealed to its members to increase financial aid to the Palestinians as a result of the move by American lawmakers.
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"We think it is money that is not only in the interests of the Palestinians, it's in US interests, and it's also in Israel's interest, and we would like to see it go forward."
If it is blocked, she added, "the concern would be that the Palestinians would not have the money to fund their police, to fund their civil servants that provide services to continue to strengthen their own security forces, that maintain peace in conjunction with Israel."
Members of the US House Foreign Affairs Committee and the Senate Foreign Relations Committee froze the funding in response to a controversial Palestinian bid to secure full state membership at the United Nations, despite strong opposition from Israel and Washington.
The economic package is separate from security aid, which the US lawmakers say it would be counterproductive to block.
The Palestinian request, which was submitted to the United Nations on September 23, has angered a coalition of pro-Israel Democrats and conservative Republican lawmakers.
Both the United States and Israel insist that only direct negotiations can produce an accord leading to Palestinian statehood.
Panetta, who was on Monday holding talks with Israeli and Palestinian leaders at the start of a trip that will include stops in Cairo and Brussels, said the aid has proved effective and brought "benefits" to Israel and the Palestinians.
The Arab League on Sunday appealed to its members to increase financial aid to the Palestinians as a result of the move by American lawmakers.
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