Israel agreed today to transfer hundreds of millions of dollars to Palestinian President Mahmoud Abbas's emergency government, a measure designed to undercut Hamas Islamists controlling Gaza.
The money, Palestinian tax revenues withheld by Israel since Hamas came to power in a 2006 election, is part of an initial package of benefits to bolster Abbas that Prime Minister Ehud Olmert is likely to announce at a summit in Egypt tomorrow.
Israel wants to isolate Hamas economically, diplomatically and militarily in the Gaza Strip, which the Islamist group seized control of more than a week ago, while allowing funds to flow to Abbas's emergency administration in the West Bank.
An Israeli government official said Olmert's cabinet approved the transfer of about $350 million, short of the $700 million sought by the Palestinian president.
The funds would be given to the emergency administration in stages, once a mechanism was in place to ensure the money would not reach Hamas in Gaza.
It was not immediately clear if the cabinet also approved proposals to ease travel restrictions for Palestinians in the occupied West Bank, where Fatah holds sway.
"We will attempt in a sober and cautious manner to take advantage of the opportunities created as a result of the recent events in the Gaza Strip, in order to build a diplomatic process with the Palestinians," Olmert told reporters.
Freeing up the tax revenues, he said, would "gradually help the new Palestinian government -- one that is not a Hamas government".
Since Hamas's violent takeover of Gaza, Olmert has spoken of laying the groundwork for a resumption of talks with Abbas on Palestinian statehood, but has stopped short of accepting his call for immediate negotiations on a final peace treaty.