The designated terrorist organization Hamas is now officially part of the Palestinian Authority, which receives $500 million in annual aid from the U.S.

Hamas and Fatah, two rival Palestinian factions that are often violently at odds with one another, entered into a unity government on June 2. Since Hamas is a U.S.- and European Union-designated terrorist organization, the new government appears to be ineligible for American money under the U.S.'s own laws.

For the Obama administration, the deal is another gamble in a region where U.S. policy has had mixed results recently. It could usher in a new political order that would transform Palestinian politics, leading to the first elections in nearly a decade.

At the same time, it could mean that the U.S. is bending its own rules to subsidize a group that it considers to be a terrorist organization.