Israel plans to turn over $100 million in frozen tax funds to Palestinian Authority Chairman Mahmoud Abbas by Friday, an Israeli official said.
The money is part of Israel's strategy to boost the moderate Palestinian leader in his standoff with the Islamic militant group Hamas, the official said.
The money will include funds for humanitarian assistance and to beef up Abbas' Presidential Guard, which has clashed with Hamas gunmen in recent weeks. The official was not authorized to discuss the matter with the media and spoke on condition of anonymity.
Israel has frozen more than $500 million in taxes it collects on behalf of the Palestinians, seeking assurances the money doesn't reach the Hamas-led government.
Western donor countries also have cut off aid, demanding that Hamas renounce violence and recognize Israel's right to exist.
Abbas, a moderate who hopes to restart peace talks with Israel, has repeatedly called on Hamas to accept the international demands. Hamas has refused, despite hardship caused by the sanctions. The tensions between Hamas and Abbas' Fatah faction have erupted into violence in recent weeks, killing 35 people in the Gaza Strip.
Seeking to boost Abbas, Prime Minister Ehud Olmert promised to turn over $100 million of the withheld funds. But Israeli officials said they first needed assurances the money would not reach Hamas.
The transfer marks the first time Israel has sent money to the Palestinians since Hamas took power last March.
The official said the money is designated for humanitarian use and the Presidential Guard. It will not be used for salaries of government workers, who have not been fully paid since Hamas took office.
Saeb Erekat, an aide to Abbas, said Israel had notified him the money would be turned over soon. "We hope the Israelis will release all withheld funds," he said.
But acting Finance Minister Samir Abu Aishah of Hamas said the government should decide how the money is spent.
"This is supposed to be spent according to Palestinian priorities. It is not for Israel to determine where it goes," he said. "We have no problem if that money goes through the president's office, but it must be spent in the areas in which they are needed, according to our priorities."
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now