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Call it Muppet diplomacy. There are about two dozen versions of "Sesame Street" around the world, and one of them is now on pause. A U.S. lawmaker has frozen funding for Palestinian "Sesame Street," along with other projects in the West Bank and Gaza, despite objections from the Obama administration. The freeze is meant to protest the Palestinians' bid for statehood recognition at the United Nations. From Ramallah, Daniel Estrin reports that Palestinian producers are hoping sunny days will sweep the politics away.

DANIEL ESTRIN, BYLINE: This used to be a busy time of year for "Shara'a Simsim," the Palestinian version of "Sesame Street." Producers and educators will be choosing the words of the day for the upcoming season. Writers would be brainstorming ideas around a large conference table. Project director Laila Sayegh says everyone would be working long days.

LAILA SAYEGH: From the morning, like 8 until 6 o'clock in the evening, usually. And now, as you see, it's empty. We have nothing.

ESTRIN: The U.S. government was set to donate $2.5 million for three more seasons of the show. But in October, the chairwoman of the House Foreign Affairs Committee placed a hold on about $190 million earmarked for projects in the West Bank and Gaza Strip. That means no money to produce "Shara'a Simsim."

SAYEGH: Nobody believes that the reason is logical. You're working on education, on fun stuff, on kids; educating kids and families. So it was very sad for everybody.

ESTRIN: Today, the writing workshop room is bare. The Muppets have been sent to New York for repairs. Saed Andoni, the show's line producer, sits in a small office, staring at a laptop. So what are you doing now that there's no funding for a new show? What are you - what do you do every day?

SAED ANDONI: Actually, we don't do anything.

(SOUNDBITE OF LAUGHTER)

ANDONI: Yeah. Surfing the Net, reading news, keeping the hope that we can stay together because, otherwise, everybody will have to go in his own way.

ESTRIN: Saed is keeping the staff on half salaries and reduced hours. They have some leftover funding to work on projects like making jigsaw puzzles for preschoolers. Palestinian TV is airing reruns, but kids are getting sick of the same old programming, says puppeteer Rajai Sandouka, as he slouched in an office chair, fingering prayer beads.

RAJAI SANDOUKA: For example, my daughter, she told me, when are you going to make a new one? I've - always, I see it, and I remember everything. I want to see something new. I don't know what I tell her.

ESTRIN: The lawmaker who ordered the hold on funding is Representative Ileana Ros-Lehtinen, a Republican from Florida. She told lawmakers that the U.S. should not support Palestinian President Mahmoud Abbas, who decided to ask the United Nations to recognize an independent state of Palestine. She said Abbas should be negotiating the matter with Israel instead.

REPRESENTATIVE ILEANA ROS-LEHTINEN: By providing the Palestinians with $2.5 billion over the last five years, the U.S. has only rewarded and reinforced their bad behavior.

ESTRIN: The U.S. did give $200 million in direct aid to the Palestinian Authority last year; it's the funding for local NGOs that's on hold. Last month, Congress released $40 million of those funds. But with infrastructure and health care programs waiting for money, it's doubtful Palestinian "Sesame Street" will get a piece of the pie.

UNIDENTIFIED MAN #1: Three, two and action.

ESTRIN: While Congress has turned off the tap for Palestinian "Sesame Street," the U.S. is helping support a new season of Israeli "Sesame Street." The State Department awarded $750,000 to a local nonprofit to team up with the Israeli show and develop classroom activities. A spokeswoman for the State Department says the grant is unrelated to funding for the Palestinian show. The cast includes an Arab Muppet, a wheelchair-bound Muppet and one familiar red character.

UNIDENTIFIED MAN #2: (as Israeli Elmo) Hello, American radio.

ESTRIN: Hi. Who are you?

UNIDENTIFIED MAN #2: (as Israeli Elmo) I'm Israeli Elmo.

ESTRIN: Palestinian producers are saying it's not fair that Israeli kids get to see new "Sesame Street" programming while Palestinian kids don't. Danny Labin, an executive at the Israeli TV channel that co-produces the show, agrees "Sesame Street" shouldn't be politicized.

DANNY LABIN: Children, no matter who they are, no matter where they're from, should not be penalized because of the politicians over which children have no control.

UNIDENTIFIED MAN #2: (as Israeli Elmo) (Foreign language spoken)

ESTRIN: Palestinian producers, like Sayegh, say they're optimistic funding will somehow return.

SAYEGH: We will continue, and we will survive.

ESTRIN: For NPR News, I'm Daniel Estrin.

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