Israel Seizes Palestinian Cash

Israeli security forces seized large amounts of cash from four Palestinian bank branches Wednesday, saying much of the money was sent by Iran, Syria and Lebanese Hezbollah guerrillas to fund Palestinian militants.

It's Israel widest search yet for money transfers from abroad to Palestinian militant groups, reports CBS News Correspondent Robert Berger.

During the raids, dozens of Palestinians threw stones at soldiers who clamped a curfew on downtown Ramallah during the raids. Seventeen Palestinians were injured by rubber bullets and live rounds, three of them in critical condition, doctors said.

It was a joint operation by police, army and the Shin Bet security service.

Troops were accompanied by computer experts from two of the banks, who had been arrested overnight, Palestinian officials said. Soldiers covered the banks' cameras with sacks or disabled them, and confined employees to back rooms, witnesses said. Customers were allowed to leave after ID checks.

"The purpose of this operation is to impair the funneling of funds, which oil the wheels of terror against Israel," an Israeli army statement said.

Palestinian Cabinet minister Saeb Erekat said the raids were unjustified.

"This is destructive to the Palestinian economy and people are really worried," Erekat said. He said he fears Palestinians will lose confidence in their banking system and their would be a run on the banks Thursday.

Israeli forces checked several hundred bank accounts, some belonging to Hamas and Islamic Jihad, security sources said. Military sources say Israel is looking for evidence to back its claim that Yasser Arafat is funding terrorism, reports Berger.

The forces took millions of shekels in cash from the bank vaults, corresponding to the amount of money they found in the targeted accounts, security sources said. Much of the funding came from Hezbollah, Iran and Syria, the sources said.

One report said the amount seized was more than 10 million shekels, or $2.24 million.

The operation is part of the "global war" on terrorist funding, an army statement said.

The raids came a day after Palestinian security officials confirmed that Hezbollah helped fund the last two Jerusalem bus bombings — on Jan. 29 and on Sunday, respectively — in which 18 Israelis and a foreign worker were killed.

On Tuesday, Yuval Steinitz, chairman of the Israeli parliament's Foreign Affairs and Defense Committee, said the Iranian-backed Hezbollah pays bonuses of several hundred dollars for each Israeli killed in a suicide bombing.

Al Aqsa militants have confirmed having received large sums from the Hezbollah, including single payments of up to $50,000, and said deadly attacks were rewarded, but denied there was a fixed pay scale.

Hamas and the smaller Islamic Jihad group also receive large sums money from abroad. Israeli officials have said some of the money was being sent in the guise of donations for Hamas-controlled charities.

In Wednesday's bank raids, troops driving jeeps, armored personnel carriers and trucks blocked off main roads in Ramallah and declared a curfew. Shopowners were ordered to close their businesses, and residents and journalists were ordered indoors, some at gunpoint.

Soldiers fired tear gas, metal-core rubber bullets and also live rounds to disperse dozens of stone throwers, hospital officials said. Seventeen stone throwers were injured, 16 by rubber bullets and one by live fire, the officials said.

Troops raided two branches of the Arab Bank, as well as the offices of the Cairo Amman Bank and the International Palestine Bank, Palestinian security officials said. Soldiers also took over several other buildings, witnesses said.

Wednesday's raids marked the largest-scale search yet for money transfers to militant groups. Last year, troops raided a bank in a West Bank suburb of Jerusalem. Also last year, the Palestinian Authority briefly froze the bank accounts of Palestinian charities in the Gaza Strip to check for possible links to Hamas.

In other developments, Israel decided to shorten the route of its West Bank separation barrier by more than 10 percent, in an attempt to ease hardship for Palestinians, security officials said.

The barrier — originally planned to run up to 450 miles — will be shortened by 50 miles, said Brig. Gen. Eran Ofir, the head of the army's technology and logistics branch.

In one area, where the army was planning to build a fence that would have cut Jenin residents off from the West Bank's Jordan Valley, an entire 12½-mile section has been canceled. In the area of Ben Gurion Airport, the defense establishment has decided not to dig a row of deep trenches, Ofir added.

Ofir also said another 2,953 feet of fencing would be removed in the area of the West Bank town of Qalqiliya. Workers began removing an five-mile section of fencing near the town of Baka al-Sharkia on Sunday.

According to a security official, who spoke on condition of anonymity, State Attorney Edna Arbel has instructed the government not to go ahead with these sections of the barrier because she would not be able to defend them in court.

Israel faces several legal challenges to its barrier, including hearings this week at the International Court of Justice in The Hague, Netherlands.

The Palestinians say the barrier, which at times dips deep into the West Bank, amount to a land grab designed to prevent the establishment of a Palestinian state.

"Israeli is building the wall inside the occupied territories," said Palestinian spokesman Mustafa Barghouti. "Israel is cutting Jerusalem into two pieces, Bethlehem into two cities."

Israel says the barrier is needed to keep out suicide bombers.

"I want to see everything that can possibly be done to make it harder and as much as possible, impossible, for these people to bring their evil into our midst," said Arnold Roth, whose teenage daughter was killed two years ago in a pizzeria bombing.

Israel expects the World Court to rule that the barrier is illegal, reports Berger.