JERUSALEM -- Israel agreed Friday to withdraw from four more West Bank towns, ending weeks of deadlock with the Palestinians over security issues and putting a troubled U.S.-backed peace plan back on track.
Israeli Defense Minister Shaul Mofaz and Palestinian security chief Mohammed Dahlan reached the deal at a time when the "road map" peace plan and a Mideast truce seemed in serious jeopardy because of renewed violence that included two Palestinian suicide bombings this week.
It was not clear just how much U.S. pressure helped end the dispute over who should make the next move under the peace plan: Israel, which is supposed to pull back from more areas of the West Bank; or the Palestinians, who must dismantle militant groups.
Under the agreement reached Friday, Israel would withdraw from the West Bank towns of Jericho and Qalqiliya next week and remove some military roadblocks.
Taking down the roadblocks is seen as a major confidence booster. Israeli checkpoints, set up at the start of fighting nearly there years ago to keep out militants, have all but paralyzed life in the West Bank.
Israel would then withdraw from the towns of Ramallah and Tulkarem in the last week of August, provided there are no shooting and bombing attacks and the Palestinian security forces begin dismantling militant groups, said Shirli Eden, an Israeli Defense Ministry spokeswoman.
The Palestinians have sought a pullback from Ramallah for some time, in part to allow Yasser Arafat some freedom of movement. Israeli travel restrictions have confined the Palestinian leader to his Ramallah headquarters for nearly two years.
Israel TV said Israel would permit Arafat to make one trip to Gaza City to pay his respects at the grave of a sister, Yousra al Kidwah, who died earlier this week at age 77. Israeli officials were not immediately available to comment on the report.
Despite the withdrawal agreement, the situation remains tense.
The militant Islamic Jihad group threatened revenge for an Israeli raid Thursday that killed the group's leader in the West Bank city of Hebron, Mohammed Sidr.
A similar raid in the West Bank city of Nablus recently prompted two suicide attacks this week, one by Hamas and the other by Iranian-backed renegades of Arafat's Fatah movement.
The Palestinian groups declared a unilateral cease-fire June 29, but the Islamic militants have said that while sticking to the truce in principle, they reserve the right to respond to Israeli raids.
It was not clear whether Islamic Jihad would make good on its threat of revenge. The militant groups are sensitive to popular opinion, and might be reluctant to launch new attacks for fear they that would prompt Israel to scuttle its troop withdrawals.
Dahlan and Mofaz negotiated the agreement in back-to-back meetings late Thursday and on Friday. "The meeting was very constructive," Dahlan said.
He said Israeli checkpoints on the outskirts of the four towns would be removed.
The road map requires Israel to pull back to positions held before the outbreak of fighting in September 2000. In a first phase, Israel withdrew from parts of the Gaza Strip and the West Bank town of Bethlehem in July.
However, Israel had said it will not withdraw from additional towns until the Palestinians begin dismantling militant groups, as required by the peace plan.
Dahlan reiterated Friday that he would not use force against Hamas, Islamic Jihad and renegades from his own Fatah movement. Palestinian Prime Minister Mahmoud Abbas has said he does not want to set off a civil war, and will continue to try to persuade the militants to stop attacks.
The dispute apparently was resolved because both sides feared they might be blamed for a breakdown of the militants' truce -- and therefore the road map -- if they did not relent.
"I would guess there has been strong urging from the United States," said David Kimche, a former Israeli Foreign Ministry official. "Israel wants to show it is doing everything possible to keep the cease-fire alive, so that if it does break down, it will not have to take the blame."
Meanwhile, a Palestinian official said Friday the Palestinian Authority has intercepted $3 million in foreign funding meant for Islamic Jihad.
The money came from "outside, non-Palestinian" sources, said Abdel Fattah Hamayel, a Cabinet minister in charge of negotiating with militant groups. He did not provide further detail.
Islamic Jihad officials denied the money was intended for the group.
The Israeli daily Haaretz, citing Israeli sources, said the money came from Iran and was intercepted recently.
Hamayel said the Palestinian Authority is making progress identifying sources of funding, in part by monitoring e-mails and phone calls between people and groups in the Palestinian territories and foreign countries.
Israeli government spokesman Dore Gold said Friday that any efforts to halt funding to militants was "positive" but stressed that the seizure was only a small step.
"We are still seeing massive amounts going from Saudi Arabia to Hamas," said Gold, who recently testified before the U.S. Senate on alleged Saudi funding of terrorism. Gold said the Saudi money comes largely from charities he said have strong ties to the government.
Meanwhile, 73 Palestinian detainees were released from Israeli jails Friday and driven to the West Bank and Gaza Strip.
The prisoners had been scheduled for release Tuesday, but Prime Minister Ariel Sharon had them returned to their cells after two suicide bombings that day.
On Aug. 6, Israel released 334 prisoners, but Palestinians said at the time too few were senior figures. The Palestinians seek the release of most of 7,000 prisoners held by Israel.
Palestinian spokesman Saeb Erekat said the releases were little more than a public relations ploy. Most of those freed had been held for allegedly staying in Israel illegally.