Israel to free funds to Abbas, ease restrictions

JERUSALEM, June 23 (Reuters) Israel next week plans to begin transferring funds to the emergency government set up by Palestinian President Mahmoud Abbas and easing some travel restrictions in the West Bank, officials said today.

The money is part of an initial package of ''gestures'' Israeli Prime Minister Ehud Olmert will present to his cabinet for approval tomorrow before talks with Abbas on Monday at the Egyptian Red Sea resort of Sharm el-Sheikh.

Officials said the gestures could be expanded in the future to include giving Abbas's security forces control over additional areas of the occupied West Bank.

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 government in the West Bank.

Israel plans to choke off all but humanitarian and basic supplies to Gaza, home to 1.5 million people.

Some aid groups said Abbas's decision to sever contacts with the Hamas leadership in Gaza was holding up negotiations on reopening Gaza's main commercial crossing at Karni.

''Food is being used as a political weapon,'' a senior Western diplomat involved in the negotiations said.

Olmert's cabinet was expected on Sunday to approve his request to recognise Abbas's emergency government and to resume the transfer of withheld Palestinian tax revenues. Israel is seeking assurances the money will not be used to support the Hamas administration in the Gaza Strip.

Israeli officials say up to 400 million dollars in tax revenues would be transferred to the emergency government in stages, short of the 700 million dollars sought by Abbas. Israel says the rest of the money has been frozen by court order.

EASING RESTRICTIONS In talks with their Israeli counterparts, US officials have requested that Israel ease restrictions on Palestinian access to the Jordan Valley, as well as remove barriers, checkpoints and roadblocks near major Palestinian population centres, including Hebron, Bethlehem and Nablus.

Israeli defence officials have mainly objected to removing the roadblocks and checkpoints near Nablus, arguing they are needed to prevent militants from criss-crossing the West Bank and infiltrating Israel.

Palestinians say the checkpoints are collective punishment.

The United Nations Relief and Works Agency, which provides emergency food assistance to 850,000 refugees in Gaza, will run out of humanitarian supplies in the coastal strip in as little as a week, spokesman Christopher Gunness said. ''It is a matter of utmost urgency that Karni be opened,'' he said.

Israel controls the land crossings between Gaza and Israel, as well as Gaza's air space and territorial waters. Israel does not allow the crossing of people or goods by sea or air. It can also close the Rafah crossing from Egypt, which is shut for now.

Some Israeli officials are questioning the new US strategy, which calls for improving economic conditions in the West Bank, restarting peace talks through Abbas and isolating Hamas in Gaza.

''You push Hamas against a wall, it will push back. It's only a matter of time before it blows up,'' said one senior Israeli official.

''It's like the Warsaw ghetto. You put them in a ghetto and they'll revolt,'' the official said, referring to the 1943 uprising by Jews in the Warsaw ghetto against the Nazis.

Hamas won parliamentary elections 18 months ago but its government was shunned by Israel and Western powers for refusing to renounce violence and recognise Israel.

REUTERS AK KP1633