Israel to transfer tax funds to PA

The cabinet voted Sunday for recognizing the Palestinian emergency government, headed by Prime Minister Salam Fayyad, and approved the transfer of frozen Palestinian tax funds to the Palestinian Authority.

The funds will be transferred to the PA in several installments, according to Industry, Trade and Labor Minister Eli Yishai's proposal. Yishai said that this would enable Israel to determine whether or not the funds help strengthen President Mahmoud Abbas.

The government also decided to continue boycotting Hamas.

Earlier in the meeting, Prime Minister Ehud Olmert said that "the process of accepting the new Palestinian government starts tomorrow, when we meet at Sharm el-Sheik and present Abu Mazen with our expectations and demands on fighting terror."

Olmert stressed that Israel intends to support the Palestinian president's newly appointed government.

Olmert's words on the new PA regime's need to fight terror came amid reports of two Qassam rockets hitting Sderot, injuring three people.

The cabinet scheduled a meeting for Wednesday, to discuss the ongoing – while decreasing – rocket firing on Sderot.

"We must try to make the most of recent developments in the Palestinian Authority," said Olmert. "This is an opportunity for the (peace) process."

Doing everything we can

The prime minister also spoke of the anniversary marking one year since Gilad Shalit was kidnapped.

"I know what the family is going through… not a day goes by without us doing our best to bring him home. We have been and will continue doing everything we can free him."

Olmert spoke briefly on his visit to the US last week, saying President Bush had "pledged US aid to Israel over the next 10 years."

Olmert went on to congratulate incoming Defense Minister Ehud Barak, and spoke of Amir Peretz' contribution as Israel's former defense minister.

Earlier Sunday, the prime minister met with Defense Minister Ehud Barak and Foreign Minister Tzipi Livni. The three discussed the message Israel would convey to the Palestinians at Monday's Egyptian summit.

Participating in the summit are Prime Minister Ehud Olmert, Palestinian President Mahmoud Abbas, King Abdullah of Jordan and Egyptian President Hosni Mubarak.

The cabinet is expected to vote favorably on recognizing the newly appointed Palestinian government as well as on the handing over of PA tax funds held in Israel.

Two ministers are expected to vote against these decisions: The Minister for Strategic Affairs Avigdor Lieberman and Tourism Minister Yitzhak Aharonovitch, both from Yisrael Beiteinu.

Giving hope 

"We must reinforce the moderate forces giving the Palestinians hope," said Social Affairs Minister Isaac Herzog. "We may have tried it before and failed, but we must help Abu Mazen stand his ground."

"I support handing over the funds gradually, while making sure they don't end up funding terror," said Housing and Construction Minister Meir Sheetrit.

Industry, Trade and Labor Minister Eli Yishai supported releasing the funds as well, as long as a "mechanism to stop them from being used by terrorists is put in place."