Israel Agrees To Transfer Millions

Israel agreed Sunday to transfer $54 million in desperately needed tax money to the Palestinian Authority, but said it might freeze payments after the Islamic Hamas group forms the next Palestinian government.

Israel's monthly transfer of the taxes and customs duties it collects on behalf of the Palestinians is crucial to the functioning of the Palestinian Authority. Halting the payments would deepen the government's financial crisis and add to the growing international pressure on Hamas to renounce violence and recognize Israel before it takes power.

As the Israeli Cabinet decided to release the money, the army conducted a wave of airstrikes in Gaza that killed five militants, including Islamic Jihad's top homemade rocket maker. The army said the strikes were meant to deter rocket fire from Gaza, which wounded a baby and two adults in southern Israel on Friday.

"If there is no quiet in Israel, we will respond seven times," said Maj. Gen. Yoav Galant, chief of Israel's southern command.

The airstrikes began early Sunday, when Israeli aircraft fired missiles at a Gaza City building used by the Al Aqsa Martyrs' Brigades — a militant group linked to the Fatah Party — killing three militants and wounding five others.

Late Sunday, Israeli aircraft launched missiles at two cars traveling 70 yards apart through the streets of Gaza City, killing two of the Islamic Jihad's top militants in Gaza.

Islamic Jihad identified one of the dead as Jihad Sawfriri, the leader of the group's rocket launching team, and the other as Adnan Bustan, who was in charge of producing rockets for the group, according to Khaled Dadouh, the group's military commander in Gaza.

Dadouh threatened to retaliate for the strike.

"We gave instructions to all our activists in the West Bank and Gaza to strike the enemy everywhere. There is no border and no limit to our response," he said.

Also Sunday, a Palestinian assailant killed an Israeli woman and wounded four other people in a stabbing rampage on a bus in the central Israeli town of Petah Tikva. Police said the attack was politically motivated.

A Palestinian man also was killed in an explosion near the West Bank city of Ramallah. Hospital officials said it appeared the man had been handling a bomb.

The violence was the worst since the Jan. 25 Palestinian elections that Hamas won in a landslide. After the election, the United States and the European Union threatened to withhold tens of millions of dollars in foreign aid to the Palestinians if the Islamic group does not moderate itself.

Israel also froze the transfer of the tax money last week because of Hamas' victory, forcing the destitute Palestinian Authority to postpone paying January salaries to its 137,000 workers. Failure to meet the payroll could lead to widespread layoffs and ignite violence in an already volatile area.

The Israeli Cabinet decided to transfer the money because Hamas was not yet in the government, Defense Minister Shaul Mofaz said.

"If the government can ensure that the money will reach those who need it, there is no reason why we shouldn't transfer the money for the salaries. As long as there isn't a Hamas government ... we need to act logically," Mofaz told the Cabinet, according to a participant in the meeting.

The Cabinet said it would review the payments each month, but Cabinet minister Zeev Boim said the funds would be cut off if Hamas, which has killed hundreds of Israelis in suicide bombings, does not change its ways.

"If and when Hamas rises to power and supports policies according to its jihad principles of destroying Israel, not another dollar will be transferred," he told Israel Radio.

So far, Hamas has rejected the international pressure to moderate and said it would turn to Arab and Muslim countries to make up the difference. Khaled Mashaal, the Syrian-based political head of Hamas, said Sunday he would go to Egypt at the start of a tour of Arab countries seeking support.

Mushir al-Masri, an incoming Hamas lawmaker from Gaza, termed Israel's payment freeze "theft" and said it should not "blackmail" Hamas.

Mohammed Abu Teir, another incoming Hamas lawmaker, said the group already has lined up $100 million in funding from an Arab country he declined to name.

As the Palestinians scrambled for funds, their attorney general said senior Palestinian Authority officials might have stolen billions of dollars of public funds.

Attorney General Ahmed Al-Meghani said his office is investigating dozens of corruption cases involving companies tied to the Palestinian Authority.

"I cannot count the numbers because I'm not an accountant. It might be billions of dollars. When I end my investigation, I'm going to outline all the numbers in detail," he said.

He said 25 suspects were arrested, and international warrants were issued for 10 others who fled the area. He declined to identify the suspects because the investigation is ongoing, but said the probe included the Palestinian oil, tobacco and broadcasting corporations.

Government corruption was a major factor in Hamas' landslide victory over the long-ruling — and corruption tainted — Fatah party.

Meanwhile, Israel reopened the Karni cargo crossing into Gaza, more than three weeks after closing it because of intelligence that militants were planning an attack there.

Palestinian officials estimated the Gaza economy lost US$30 million due to the closure.