• English Site
• > SPIEGEL Blog
• > Middle East

Freeing Frozen Funds

Israel Transfers $100 Million to Palestinians

Israel has transferred $100 million in tax revenues to the Palestinian leader Mahmoud Abbas as part of efforts to support the moderate leader. The power struggle between Fatah and Hamas may come to an end this weekend.

Beleaguered Palestinian Authority President Mahmoud Abbas has received a much needed boost to his authority after Israel finally transferred millions of dollars in withheld tax revenues to him.

Israel transferred $100 million (€77 million) in tax revenues on Thursday night to Abbas, who belongs to the moderate Palestinian party Fatah. The revenues are part of taxes and customs duties which Israel collects on behalf of the Palestinian Authority and which play a crucial role in the weak Palestinian economy.

"The money has been transferred," confirmed a senior official in Israeli Prime Minister Ehud Olmert's office, speaking on condition of anonymity.

It is the first transfer of tax revenues since the militant Islamist group Hamas took control of the Palestinian government in March after winning elections. The Israeli government decided to halt the transfers, estimated at $50-$60 million per month, due to Hamas's refusal to recognize Israel and forswear violence.

Israel, the US and the European Union consider Hamas to be a terrorist group because of its history of suicide bombings against Israelis. The international community also stopped financial aid to the Palestinian Authority when Hamas came to power, leading to many Palestinians having gone without a paycheck for months.

The transfer gives Abbas much-needed support ahead of crunch talks with the top Hamas leader Khaled Mashaal in Damascus this weekend. The US has been putting pressure on Israel to support Abbas in his power struggle with Hamas. The Hamas and Fatah factions traded gunfire in violent clashes in the Gaza Strip last month, leading to fears of civil war breaking out in the Palestinian Territories.

The Israeli official said the money would be transferred directly to Abbas to meet humanitarian needs and to boost his presidential guard, according to wire reports. The official said Israel was satisfied by assurances that the money would not go to the Palestinian Finance Ministry, which is controlled by Hamas. The $100 million will not be used by Abbas to make long-overdue salary payments to Palestinian public sector workers, the official said.

A senior aide to Abbas, Saeb Erekat, told Reuters the funds would go towards humanitarian projects and the private sector, but declined to say whether any money would be used to boost Abbas's security.

The transfer comes on the same day that the Hamas-led government announced that the Palestinian budget for 2007 would be the highest ever for the Territories. The total amounts to $2.56 billion, up $500 million over last year. Acting Finance Minister Samir Abu Aisheh said he was counting on international aid to keep the deficit to a minimum.

Meanwhile in further evidence of improving Israeli-Palestinian relations, Israeli Defense Ministry officials announced Friday that Israel has frozen controversial plans for a new settlement in the West Bank.

Defense Minister Amir Peretz ordered the plans for the settlement frozen indefinitely "in order to look carefully at the implications," the officials told Associated Press, speaking on condition of anonymity.

Peretz had ordered the freeze "several weeks ago," the official said.

Israel's announcement last month that it had approved the construction of a new West Bank settlement met with international condemnation. The "Maskiot" settlement was intended to house settlers evacuated from the Gaza Strip in Israel's 2005 pullout and was the first new West Bank settlement officially approved since the early 1990s, when Israel pledged to stop settlement construction as part of the Oslo peace process.

dgs/ap/reuters