Aides to Prime Minister Ehud Olmert responded to remarks made by Defense Minister Amir Peretz that Israel could consider releasing tax rebates collected on behalf of the Palestinians, saying "it is very nice that Amir Peretz is distributing checks, but it is a shame that he has no right to sign them."
Aides added that the issue of liquidating funds to the Palestinians is not on the agenda.
Peretz told US Secretary of State Condoleezza Rice on Thursday that Israel would be ready to release millions of dollars in tax rebates to the Palestinian Authority if Corporal Gilad Shalit is released.
"The key to releasing funds to the Palestinian Authority is tied to the issue of returning Gilad Shalit home and to other issues that are part of our conditions – such as the halt of Qassams and violence against communities in the Gaza area."
Secretary of State Condoleezza Rice and Defense Minister Amir Peretz (Photo: AP)
"All needs to be done to improve living conditions in the Authority's territories. I see the improvement of living conditions in the territories and assistance with the humanitarian crisis as part of Israel security needs," he added.
Improved living conditions in the Territories is as much an Israeli interest as it is a Palestinian one.
Peretz and Rice met at the David Citadel Hotel in Jerusalem.
Asked about the possibility of reviving peace talks with the Palestinians, Peretz said "the situation in the Authority is very sensitive and volatile. We need to wait and see how things develop."
Peretz said it is in Israel's interest to bolster Palestinian President Mahmoud Abbas as a first step towards renewing peace talks with the Palestinians.
Peretz thanked Rice for Washington's support for Israel during the war and for agreeing to increase defense cooperation between the two countries.
"I stressed the will to fully implement (United Nations) Resolution 1701 and the issue of border crossings between Syria and Lebanon, in which I see as key to implementing Resolution 1701 and certainly the issue of the kidnapped and missing soldiers which stood as a weighty issue," Peretz said.
Peretz said Rice sees eye to eye with Israel the importance of securing the release of the kidnapped soldiers.
Peretz said Israel would consider freeing tax rebates collected on behalf of the Palestinian Authority for humanitarian causes, but warned that released funds could reach Hamas.
During talks with Foreign Minister Tzipi Livni, Rice urged Israel to bolster Abbas.
Attila Somfalvi contributed to the report