The move was approved despite the defense establishment's strong objection. The Palestinians will also receive from Israel 2 million bullets supplied by Jordan.
"We are asking the Palestinians to fight terror. How are they supposed to do that, with stolen Israeli cars?" a senior official at the Prime Minister's Office said in response to the criticism over the planned move, which was approved a week ago.
The Prime Minister's Office denied previous reports that Israel would supply 50 armored vehicles and 1,000 rifles to the Palestinians: "Not one rifle was approved."
Russia offered to transfer the armored vehicles to the Palestinian Authority two years ago, but the IDF and the Shin Bet opposed the proposal for fear that the equipment would reach terror organizations.
The objection grew stronger after Hamas took over the Gaza Strip.
According to diplomatic sources in Jerusalem, the prime minister decided to agree to the offer several days before the US-sponsored summit, and to allow the Palestinian president to receive the armored vehicles, the weapons and the ammunition. It is unclear when the equipment will be transferred to the PA.
Security sources still believe that this is a dangerous move. Although the armored vehicles are considered defensive rather than offensive equipment, weapons transferred through official channels have been known to reach Hamas in the past.
According to defense establishment officials, a large number of terror cells are located in the West Bank city of Nablus, where the equipment is slated to arrive.
Talking to Ynet, the sources explained that "the moderate factions in the PA must prove that they are fighting terror." According to the sources, instead of taking moves which may be eventually directed at Israel, the two sides must move forward in slow, trust-building steps, while gradually tightening the coordination between the security organizations on both sides.
Diplomatic sources said, "Saying that Israel's security is at risk because of these 25 armored vehicles is exaggerated. We are not talking about tanks or about cannons. If we want to bolster the PA so that it can fight terror, we must give them the tools."
Prisoner list released
The transfer of military equipment to the Palestinians is only part of the prime minister's gestures ahead of the conference. The Israel Prison Service on Tuesday released the list of Palestinian prisoners Israel plans to release.
IDF Chief of Staff Gabi Ashkenazi expressed his objection to the release, saying that as long as kidnapped soldier Gilad Shalit is being held by terror organizations, there is no room to free prisoners to the Gaza Strip, which has been declared "a hostile entity".
Earlier this week, Olmert and Abbas met once again, in a bid to draft a joint statement ahead of the Annapolis conference. At this stage, the two leaders have failed to draft the statement, and have even raised the option to present two separate statements at the summit.
The host, US President George W. Bush, may outline in his statement a new vision for a permanent agreement between Israel and the Palestinians, and may even include a timetable.
On Tuesday, during his meeting with Egyptian President Hosni Mubarak in Sharm el-Sheik, Olmert sounded optimistic about the chance to reach a permanent agreement in 2008. He noted that all the core issues would be discussed – "everything that bothers us and everything that bothers them."
Meanwhile, the preparations for the Annapolis summit continue. On Tuesday, Washington released the list of invitees, which includes more than 40 countries – including Syria and Saudi Arabia.
Roni Sofer and news agencies contributed to this report