A Manhattan federal judge said Monday he would impose a lenient bond on the Palestinian Authority and Palestine Liberation Organization to stay a $654 million terrorism judgment during appeal after the United States warned that tougher terms could destabilize the Mideast.

Plaintiffs' lawyers who won the verdict on behalf of victims of terrorist attacks wanted a bond of $30 million a month while the appeal is pending, but U.S. District Judge George B. Daniels said he would order $10 million to be posted in 30 days, and $1 million more each month.

The Palestinian Authority says it is effectively insolvent and an onerous bond could push it over the edge, or force dramatic cuts in social spending. Daniels said he gave "serious consideration" to a U.S. government filing expressing "significant concerns" about the Authority's finances.

"The collapse of the PA would undermine several decades of U.S. foreign policy and add a new destabilizing factor to the region, compromising national security," Deputy Secretary of State Antony Blinken said in an affidavit filed Aug. 10.

Kent Yalowitz, a lawyer for the plaintiffs, said the low bond would encourage foot-dragging during the appeal and create a risk there wouldn't be assets available to pay the verdict if it is affirmed on appeal.

"We're disappointed in the amount," Yalowitz said, calling the security ordered by Daniels a "rounding number" and a "token amount" for an entity with annual operating revenues in excess of $3.5 billion.

Yalowitz also contended that the Authority could afford to pay more by cutting monthly payments to alleged terrorists imprisoned in Israel, but in a sharp exchange, defense lawyer Mitchell Berger said the payments go to families of administrative detainees, not terrorists.

Berger said the low bond reflected the fact that "there's a lot at stake here, as the U.S. government has indicated," and told Daniels the defendants would not drag their feet on appealing the verdict.

"There is a reputational damage," he said. "They want to proceed with their appeal."

A jury in February found the Palestinian Authority and PLO liable for supporting attacks in the Jerusalem area in 2002 that caused injuries to members of 10 U.S. families.

The $218 million award was tripled under a federal law allowing victims of terrorism abroad to sue.

While staying collection of a judgment during appeal is not unusual, the amount of bond required can exert significant pressure on the losing party to settle, while inadequate bond can create a risk that money to pay the judgment will be lost.

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