Olmert agrees to release funds

Israeli Minister Ehud Olmert agreed on Saturday to release US$100 million in frozen funds to Palestinian President Mahmoud Abbas and ease West Bank travel restrictions -- goodwill gestures that revived hopes for a resumption of peace talks after years of hostility and distrust.

Olmert the promises in a two-hour meeting with Abbas at the Israeli leader's official residence, the first Israeli-Palestinian summit in a year and a half.

The meeting is a "first step toward rebuilding mutual trust and fruitful cooperation," Olmert's office said. Palestinian officials praised the warm atmosphere and said more meetings were planned.

The meeting comes at a time when both men are facing serious political problems at home and stand to gain domestic support with a peace breakthrough.

Olmert Abbas failed to reach agreement on a key issue -- a prisoner swap -- but decided to set up a committee to study it further.

Part the equation is not in Abbas' hands. Hamas-allied militants hold an Israeli soldier they captured last June in a cross-border raid. Olmert said he would not release any of the more than 8,000 Palestinian prisoners Israel is holding until the soldier, Corporal Gilad Shalit, is freed.

"This is only in the future after Gilad Shalit is released by the Hamas," said Olmert's spokeswoman, Miri Eisin.

greeting

The Israeli leader set a cordial atmosphere at the start of the meeting. He emerged from his residence to greet Abbas, shaking hands and kissing the Palestinian leader on both cheeks. Abbas was then introduced to Olmert's wife Aliza, an artist known for her dovish views. The two leaders took seats opposite one another at a long table, set for a meal and covered by white cloth. Israeli and Palestinian flags served as table decorations.

A key achievement for Abbas is the release of US$100 million in funds frozen by Israel when Hamas won legislative elections earlier this year. In addition, Israel will transfer 35 million shekels (about US$8 million) to Palestinian-run hospitals in Jerusalem, Palestinian negotiator Saeb Erekat said.

With a solid majority in parliament, Hamas controls the Palestinian Cabinet and oversees all government ministries. In disbursing the money, Abbas' office will increasingly take on the role of a shadow government.

Hamas been the target of an international aid boycott. The aid cutoff, and Israel's decision to seize hundreds of millions of dollars of Palestinian tax funds, has caused widespread hardship in the Palestinian territories and made it difficult for the Palestinian government to pay the salaries of its 165,000 civil servants.

transfer

Eisin said Israel plans to transfer the money soon, but wants to make sure the funds don't reach Hamas. She said Israel would consider various channels, including Abbas' office.

"We're looking for a way, like the international community, to alleviate the humanitarian suffering in the Palestinian community. When we find a way, we'll be able to start transferring funds," she said.

Israel agreed to remove several roadblocks in the West Bank and consider dismantling others, both sides said. The roadblocks, which Israel says are needed for security, hinder movement of Palestinians.

In addition, Olmert promised to meet a quota of 400 trucks moving through the main cargo crossing between Gaza and Israel each day. The crossing is vital for Gaza's economy.

Olmert's said the two sides also discussed the possibility of expanding a month-old ceasefire in the Gaza Strip to the West Bank. However, he complained of the dozens of rocket attacks out of Gaza since the Nov. 26 truce, and said Israel's patience is running thin.

Ghazi Hamad, spokesman for the Hamas-led government, criticized Israel's "trickery" in Saturday night's meeting.

"Israel did not give any clear answers to many important issues, whether taxes or prisoners," he said, adding that Israel had no right to decide how withheld tax funds are spent.

Abbas, elected in a presidential vote last year, has been locked in an increasingly bitter and violent showdown with Hamas since the Islamic group took office.