JERUSALEM -- The Israeli government agreed yesterday to release $55 million in taxes and customs duties it withheld from the cash-strapped Palestinian Authority in the aftermath of Hamas' victory in last month's parliamentary elections.
But Israeli leaders warned that future transfers of the funds collected on behalf of the Palestinian Authority would hinge on the shape and tenor of the new Palestinian government. The money had been relayed automatically each month, under a long-standing economic agreement.
Hamas, a radical Islamic group sworn to Israel's destruction, won the right to form a new Palestinian government after capturing a majority of legislative seats Jan. 25 from the long-dominant Fatah party of Mahmoud Abbas, the Palestinian president.
Israel proceeded with the transfer, due Wednesday, because "Hamas has not yet formed a government on the other side," Foreign Ministry spokesman Mark Regev said. But he said future transfers would no longer be automatic but would "depend on how things will develop on the other side."
Palestinian leaders complained of Israel's decision to suspend the transfer, saying the money was urgently needed to help pay the salaries of 135,000 public employees.
Israeli leaders have vowed to have no dealings with a Hamas-led government unless the group recognizes Israel, renounces violence and adheres to agreements in place between the Palestinians and Israel. The new Palestinian parliament is to convene Feb. 16, and Hamas leaders say they hope to form a government by month's end.
Hamas has carried out dozens of suicide bombings and other attacks against Israelis during more than five years of conflict. It is considered a terrorist organization by Israel, the United States and the European Union.
The United States and Europe have threatened to halt tens of millions of dollars in aid unless Hamas drops its rejection of Israel and renounces armed struggle. Palestinian officials have warned that such an aid cut could be catastrophic. Western countries contribute about $1 billion a year.
Hamas leaders have indicated that they hope to find financial help elsewhere.
The Palestinian attorney general, meanwhile, said yesterday that as much as $700 million might have been stolen or misspent by officials in the Fatah-led government.
Ahmed al-Moghani told reporters in Gaza City that two dozen officials had been arrested as part of a far-reaching investigation into companies with ties to the Palestinian Authority.
Corruption in the Palestinian Authority under Fatah rule was a major issue in the legislative campaign.
Also yesterday, at least two militants from the Islamic Jihad group were killed and four people were injured during an Israeli airstrike on a pair of cars in the Zeitoun neighborhood of Gaza City, Palestinian medical officials said. The group said the two killed were field commanders riding in the same vehicle.
The Israeli military said the men were involved in firing rockets from the Gaza Strip into Israel.
In other developments yesterday, a Palestinian man armed with a knife killed an Israeli woman and wounded four others aboard a bus, police said.
The attacker, described by authorities as a university student in his 20s from a village near the West Bank city of Nablus, stabbed several passengers riding in a public-transport van in the Israeli city of Petah Tikva, about 35 miles northwest of Jerusalem, police said.
The attacker was subdued by passengers and placed under arrest. He told investigators that "he came in to kill as many Jews as possible," Israeli police spokesman Micky Rosenfeld said.
The stabbings came hours after three Palestinian militants were killed and five people were injured during Israeli airstrikes in the Gaza Strip. Among the injured were several members of the Palestinian security forces who were hurt when one of the Israeli missiles struck a car passing near their base.
The militants were reported to be members of the Al Aqsa Martyrs Brigades, a militia loosely tied to Fatah.
Ken Ellingwood writes for the Los Angeles Times