Israelis, Arabs Meeting to Shore Up Abbas
Portion of Tax Revenue Unfrozen to Aid Fatah

By Ellen Knickmeyer and Scott Wilson
Washington Post Foreign Service
Monday, June 25, 2007

CAIRO, June 24 -- Israel and its Arab neighbors readied for a summit Monday to explore restarting the Israeli-Palestinian peace process in an attempt to shore up the emergency government of Palestinian Authority President Mahmoud Abbas.

Israeli Prime Minister Ehud Olmert headed to the meeting at Egypt's Red Sea resort of Sharm el-Sheikh with a message that his government would support Abbas, whose administration now appears limited to the West Bank. The Palestinian leader swore in a new cabinet on June 17 after fighting in the Gaza Strip in which the rival Hamas movement overwhelmed security forces loyal to Abbas's Fatah party and effectively severed political links between the two Palestinian territories.

"We will attempt in a sober and cautious manner to take advantage of the opportunities created as a result of the recent events in the Gaza Strip, in order to build a diplomatic process with the Palestinians," Olmert told reporters in Jerusalem on Sunday. He spoke in advance of a cabinet meeting in which Israeli ministers voted to release hundreds of millions of dollars in frozen Palestinian tax revenue, a move Israeli officials said was designed to bolster Abbas's administration.

Egyptian President Hosni Mubarak is hosting the one-day summit, which brings Abbas and Olmert together with Mubarak and Jordan's King Abdullah II, leaders of the only two Arab countries to have signed peace accords with Israel. Saudi Arabia's King Abdullah is expected to arrive later this week, after Olmert's departure, for talks with Mubarak.

Arab officials, buffeted by violence in Iraq and Lebanon and tensions with Iran, said the summit offered little chance of an Israeli-Palestinian breakthrough.

"Right now, we're just going through so many events and contradictions, and there is a vacuum of leadership" internationally, said one Saudi official. "Events are coming faster than our ability to respond," said the official, who spoke on condition of anonymity.

In Cairo, an official with the 22-member Arab League said the break between Fatah and Hamas was a sign that Palestinian society was breaking apart in the absence of peace talks.

"This region is not on a peace footing; it's on a war footing," said Hesham Youssef, cabinet chief for the Arab League. "We have to work to put this region on the right track and this region cannot be on the right track without a viable peace process." Israeli and Palestinian leaders last attempted to negotiate a comprehensive peace plan in January 2001.

In the 10 days since Hamas completed its military conquest of Gaza, Israeli officials and international donors have sought to improve the standing of Abbas, with Egypt and Jordan asserting that his administration is the only legitimate Palestinian government.

The two largest Palestinian parties, each with armed factions and affiliated security forces, have failed to begin reconciliation talks since the fighting in Gaza, which killed more than 140 Palestinians. Hamas leaders in Gaza called Saturday for talks with Fatah to form a new power-sharing arrangement, a proposal rebuffed by Fatah officials.

Abbas traveled to Jordan on Sunday to meet with Abdullah. The Jordanian leader urged Abbas to use Monday's gathering to work toward an Arab-Israeli accord based on two states, Israel and Palestine.

"The summit must be seized as an opportunity to formulate a clear timeline to return to negotiations," Abdullah told Abbas, according to a statement issued by Jordan's government.

Egyptian Foreign Minister Ahmed Aboul Gheit, in a phone call to Israeli Foreign Minister Tzipi Livni on Saturday night, asked Israel to "act towards the Palestinian Authority in a way that achieves calm, and creates the atmosphere for resuming the peace process," Egypt's Foreign Ministry said in a statement.

Aboul Gheit asked for an easing of Israeli actions in the West Bank -- a halt to construction of Jewish settlements and its security barrier there, the removal of checkpoints and an end to raids into Palestinian towns.

Israel's military has blocked previous moves to ease barriers between the West Bank and Israel, calling the obstacles essential to protecting Israel from Palestinian attacks.

At Monday's summit, Olmert said, Israel plans to present "our expectations from the other side and demands for a fight against terror" by the Palestinian government. "At the same time, we will declare our intention to assist the new [Palestinian] government that is obligated to abide by the terms set out by the international community," Olmert said.

The Israeli cabinet decision approved the release of roughly half of the tax revenue Israel is holding, which totals at least $700 million. Israeli cabinet officials said the balance would be transferred gradually if Abbas showed progress disarming Palestinian militias and if his political standing benefits from the funds.

Palestinian officials expressed disappointment over the cabinet's decision, saying Israel should be doing far more to ensure that Hamas does not make inroads in the West Bank, where the Fatah movement still holds sway.

"We're not happy with this, although they promised it would be only the beginning," said Yasser Abed Rabbo, a senior adviser to Abbas. "We're back to the same old cycle of games. I don't know why they don't release all of it, and give this government the credit that it deserves."

Israel collects customs and value-added taxes on behalf of the Palestinians under an annex to the 1993 Oslo accords that sets out the economic relationship between Israel and the Palestinian Authority.

The estimated $55 million in monthly tax transfers accounts for nearly half the Palestinian Authority monthly payroll, and the freeze, coupled with an international aid embargo against the Hamas-led cabinet, has made it impossible for the government to fully pay salaries for more than a year.

Hamas is classified as a terrorist organization by the United States and the European Union, which along with Russia and the United Nations make up the so-called Quartet of peace mediators. The Quartet has demanded that any Palestinian government recognize Israel, renounce violence and abide by previously signed agreements with the Jewish state -- conditions two Hamas-led governments refused to meet.

In Gaza, Ismail Haniyeh of Hamas, removed by Abbas as prime minister, said Sunday that the summit would divide the Palestinians further. He demanded that some of the tax revenue Israel plans to release to Abbas be sent to Gaza, where Haniyeh continues running government ministries.

"The Americans won't give anything. Israel won't give us anything," Haniyeh said. "Our land, our nation will not come back to us except with steadfastness and resistance."

Wilson reported from Jerusalem.