July 02, 2007	Monday	Jamadi-us-Sani 16, 1428

RAMALLAH, July 1: Israel lifted its 17-month economic boycott of the Palestinian Authority on Sunday for Palestinian president Mahmud Abbas, while vowing no let up in strikes against “terrorists.” Almost $120 million in withheld tax duties were transferred from Israel to the Palestinian Authority in the West Bank, the first instalment of some $400 million in back taxes Israel will pay over six months.

The end of the economic siege provides a badly needed injection of cash to Abbas's new Western-backed government in the West Bank and will allow thousands of Palestinian civil servants to be paid for the first time in months.

The move came after Abbas sacked a unity government led by the Islamist Hamas movement, seen as a “terrorist” group in the West, in the midst of its violent seizure of the Gaza Strip last month.

“We received 500 million shekels now,” a senior Palestinian official in the West Bank political capital of Ramallah said.

“Israel affirmed to us that they would transfer tax duties, amounting to $50 to 60 million every month, and that they will also transfer all the money owed from before.” Releasing the money is a centrepiece of Israeli Prime Minister Ehud Olmert's policy of boosting Abbas's moderate Fatah-led government, which has received broad international support, while further isolating Hamas in its Gaza bastion.

Olmert told his weekly cabinet meeting there would be no relaxation of Israel's pursuit of “terrorists” even as he praised Abbas's new government led by US-educated prime minister Salam Fayyad.

His warning came after Israel killed the commander of Islamic Jihad's military wing in air strikes on the Gaza Strip on Saturday.

“War against terror is continuing without letting up. Yesterday the defence establishment carried out extremely important attacks against the Islamic Jihad where seven terrorists were killed,” he said.

“This pinpointed activity will continue anywhere in the south (Gaza) or in Judaea and Samaria (the occupied West Bank).

Nevertheless he said “actions taken by the new government... cautiously allow for the creation of new ways to cooperate between us and them that will allow us to move forward on the diplomatic channel.” Ziad al-Ghnam, general commander of Islamic Jihad's Al-Quds Brigades, and two other senior militants were killed in the air strike in the southern town of Khan Yunis, the group said.

They were travelling in the same car when an Israeli aircraft fired two missiles into the vehicle.

Four more Palestinians, at least two of them civilians, were killed in another Israeli air strike in the Maghazi refugee camp in central Gaza on Saturday.

Israel accused Ghnam of orchestrating a string of anti-Israeli attacks, including the killing of a pregnant woman and her four daughters in May 2004.

Around 1,500 Palestinians attended a funeral for the militants in the southern Gaza town of Rafah, shouting “revenge, revenge, in the heart of Israel” as gunmen rattled off shots into the air.

Two mortar rounds were fired by Gaza militants into open fields in southern Israel on Sunday, causing no casualties or damage, the army said.

The withholding of the tax receipts from governments led by Hamas — which Israel boycotts as a terrorist organisation — sparked a financial crisis for the Palestinian Authority, leaving it largely unable to pay its staff.

Israel's monthly transfers of $50 to 60 million worth of customs duties, which are levied on goods destined for Palestinian markets that transit through Israeli ports, constitute around a third of the Palestinian budget.

“Agreement with Israel was reached on the final issues and it (payment) will be direct between the Israeli government and the finance ministry,” Palestinian chief negotiator Saeb Erakat said.

A Palestinian official said it would take six months to complete the transfer of around $400 million in outstanding tax receipts.—AFP