Israel releases Palestinian tax funds and moves towards talks

ISRAEL yesterday said it would hold security talks with Palestinians soon and release more frozen tax money as part of a pledge to ease the hardships of 700,000 people under Israeli curfew in the West Bank.

The Israeli gestures, made after international condemnation of an Israeli air raid in Gaza a week ago, coincided with US plans to discuss with Palestinian officials in Washington next month steps to reform the Palestinian Authority.

While the moves toward dialogue provided a rare ray of light in 22 months of violence, a Palestinian peace negotiator noted that residents of seven West Bank cities reoccupied by Israel last month after suicide bombings remained confined.

“I see all checkpoints and roadblocks that surround our towns, villages and refugee camps. (They) have tightened their siege and closure on the movement of goods and people,” Saeb Erekat told reporters.

Israeli Defence Minister Binyamin Ben-Eliezer said he expected to start security contacts with the Palestinian leadership this week, suggesting talks could begin with Interior Minister Abdel Razzak al-Yahya or another senior official: “I hope it will go well. Then it will be possible to say that we are starting in a direction which we might expect will bring stability in the area.”

There was no immediate comment from Palestinian leaders.

Both sides have insisted a security dialogue and the talks Israeli Foreign Minister Shimon Peres held with Palestinian moderates earlier this month after a four-month freeze, do not constitute peace negotiations.

Prime Minister Ariel Sharon says Palestinian “violence, terrorism and incitement” must stop before peacemaking can resume. President Bush wants a new Palestinian leadership to replace one he says is tainted by corruption. In Paris, Peres said Sharon understood there was no military solution to the conflict with the Palestinians.

“The fact is, we are working together ... I’m not acting alone,” said Peres, who has been largely sidelined in Israel's coalition government and within the Labour Party he no longer heads.

Announcing an easing of pressure on the Palestinians, Israel's Finance Ministry said it would transfer $14 million in frozen taxes to the Palestinian Authority in the next few days. The pending transfer of funds, part of around two billion shekels in back taxes owed to the Palestinians held back since the start of a Palestinian uprising nearly two years ago, follows a 200-million shekel transfer last week.

“They gave to us $14 million, which is less than 1% of our frozen money and I hope they will release all our money,” Palestinian President Yasser Arafat said in the West Bank city of Ramallah. The money is due to be transferred to a Palestinian Authority bank account controlled solely by Palestinian Finance Minister Salam Fiad to ensure it is not used to finance “terror activity,” the Israeli Finance Ministry said.

Sharon’'s office said he had ordered cutting the duration of curfews, issuing work permits for 12,000 Palestinian labourers and dismantling some checkpoints. An Israeli political source said the checkpoints were "mostly minor.” The Palestinians say the curfews, the army's takeover of seven cities in the West Bank and frequent military raids have increased tensions and blocked efforts to end the violence, in which at least 1,470 Palestinians and 564 Israelis have died.

Israel says Palestinian militants are to blame for fuelling tensions by continuing suicide bombings and other attacks.