Clinton administration officials have expressed dismay at the move, saying that cutting off funding to the Palestinians at this time will not help Yasser Arafat's attempts to crack down on Hamas.
But to the sound of bipartisan congressional cheers, Gilman dug in his heels at a hastily convened hearing in the wake of Hamas' renewed terror campaign against Israel.
"The hold on these funds will remain until the PLO responds to congressional concerns about its assets, and fulfills its written obligations to root out terrorist groups in its midst," Gilman said at the hearings.
Last month, Gilman stalled about $13 million that was slated for the Holst Fund, an international bank account of sorts used to pay expenses incurred by the Palestinian Authority.
After the recent spate of bombings in Israel, Gilman went public with his decision to withhold the funds.
Before any foreign assistance is sent abroad, the Agency for International Development notifies four relevant committee chairmen as a matter of formality.
At that point, any of the four can delay the spending in an action called a "hold."
Gilman has led the charge against remitting funds to the PLO in an effort to coax Arafat's government to more stringently meet the peace accords with Israel.
After the signing of the Declaration of Principles in 1993, the United States pledged $500 million to the PLO, to be distributed over a five-year period.
The United States delivered more than $154 million to the Palestinian Authority in 1994 and 1995. About $80 million in direct assistance is slated for delivery this year. The remaining amount is channeled through nongovernmental assistance programs.
In a brief interview after the hearing, Gilman said he would not allow any further funds to reach the Palestinian Authority until that body "eliminates Hamas," amends its covenant calling for the destruction of Israel and extradites terrorists to Israel.
Arafat must also stop making statements out of "both sides of his mouth," Gilman said, referring to Arafat's habit of saying different things to different audiences.
Since the bombings, the State Department has unsuccessfully pressed Gilman to release the $13 million.
Before the bombings, however, Gilman authorized three separate money transfers after initially putting a hold on them.
While avoiding direct criticism of the committee, witnesses at the hearing urged the lawmakers to continue U.S. assistance.
"Cutting off aid to the Palestinians would weaken the ability of Palestinian authorities to manage the areas under their jurisdiction," said Robert Pelletreau, assistant secretary of state for Near East and South Asian affairs.
"It would also hamper their ability to fight terror and to show the Palestinian people the benefits of peace at this critical moment."
Hasan Abd Al-Rahman, chief PLO representative in Washington D.C., also asked the committee to release the funds. He faced a skeptical panel of lawmakers and received an unfavorable response to his call for funding and his complaints about Israel's closure of Gaza and the West Bank.
Israeli Prime Minister Shimon Peres balked at the invitation to send a military official to testify on behalf of the Jewish state's war on Hamas and its peace policies, Israeli officials here said.
Calling the invitation "unprecedented," an Israeli official said the testimony could not be cleared by Peres and the military chief of staff in time for the hearing.