"We are arguing the point, needless to say, with them strenuously," Prince Saud al-Faisal, Saudi Arabia's longtime foreign minister, told reporters Wednesday. "It is only through inclusion that you may change the position of Hamas."

Saud is in Washington for meetings with Secretary of State Condoleezza Rice and other U.S. officials. He said he argued against cutting U.S. and European aid to the Palestinian government at a meeting at the United Nations last week with Rice and other potential Mideast peacemakers.

"We thought that was the wrong policy," Saud said.

Hamas, which refuses to renounce violence and has claimed responsibility for dozens of suicide bombings against Israel, is considered a terrorist organization by both the United States and the European Union. U.S. law forbids direct contact with Hamas, or financial support for it.

The United States has helped lead an international boycott of aid to the Palestinian government since the victory of Islamic militants in elections in January.

The squeeze has intensified since Hamas formed a Cabinet two months ago, and the militants are now unable to pay government salaries or provide many basic services in the impoverished Palestinian territories. The previous secular Palestinian government relied on about $1 billion annually in overseas donations, out of a budget of $1.9 billion.

"The Palestinians are living on such a subsistence level now, if you keep help away from them, where do they go?" Saud said.

By denying aid, "you are not harming the government, you are only adding radicalism to the Palestinians," he said. "Instead of them calling on the government to support the peace process, they will be going the other way."

Saudi Arabia contributes to the Palestinian cause through the Arab League, but more than $70 million in Arab League donations is now frozen because of U.S.-supported banking restrictions. Iran has also pledged new support for Hamas.

The United States, United Nations, European Union and Russia last week approved a still-vague plan to funnel new money to the Palestinians while bypassing the government.

Saud said he is convinced Hamas can moderate, given time and dialogue.

"If we don't talk to them, how do we convince them they should change their attitude toward peace?" he said.

Separately, Saud said the United States will release 16 Saudi Arabian nationals this week from the Guantanamo Bay prison camp for suspected terrorists.

An estimated 100 Saudis are being held at the U.S. military prison in Cuba, some of them for more than four years. Their detention has been an irritant in the otherwise improving relationship between the Bush administration and the Saudi kingdom, which U.S. officials say has been helpful in tracking and stopping terrorism since the attacks of Sept. 11, 2001. Most of the 19 hijackers were Saudi.

"It took us how many years to get them back?" Saud told reporters. "It hasn't been easy."

Lt. Cmdr. Jeffrey Gordon, a military spokesman, said the U.S. doesn't discuss movements of detainees from Guantanamo until after they have occurred.

"We have a process in place for detainee movements from Guantanamo, which entails an official announcement as soon as a transfer or release of detainees is completed. We intend to follow that process," Gordon said.

The military still holds about 480 detainees at Guantanamo following a series of releases and transfers that began in October 2002, nearly 10 months after the detention center opened.

A total of 759 inmates have been held over the years at Guantanamo, according to Defense Department documents released to The Associated Press in response to a Freedom of Information Act lawsuit.

Of those, 136 have been Saudis, making them the second largest contingent of Guantanamo prisoners, behind only the 218 Afghans.