Israel OKs release of tax funds in gesture of goodwill

JERUSALEM -- The Israeli Cabinet on Sunday approved the release of frozen tax funds to Palestinian President Mahmoud Abbas, in a step to bolster the moderate leader in his standoff against the Islamic militant group Hamas.

The vote came ahead of Israeli Prime Minister Ehud Olmert's meeting today in Egypt with Abbas, President Hosni Mubarak of Egypt and King Abdullah II of Jordan.

The summit is designed as a high-profile display of support for the Palestinian president against his Hamas rivals, who seized control of the Gaza Strip in a brutal rout of Abbas' Fatah movement earlier this month.

The main proposal at Sunday's Cabinet meeting was a gradual release of some $550 million tax money that Israel has withheld from the Palestinians since Hamas swept Palestinian parliamentary elections in January 2006.

Olmert asked that the funds be released "to support in a phased process the new Palestinian government, which is not a Hamas government."

Olmert's spokeswoman, Miri Eisin, said the vote was a "decision in principle" to release the funds, and that the "exact amount" would be discussed at today's summit and then again by the Israeli government.

Meeting participants said the proposal passed with an overwhelming majority; just two ministers voted against it.