The government approved the release of some NIS 250 million in customs and tax revenues to the Palestinian Authority on Sunday, but said from now on the money would not be transferred automatically and would be dependent on the situation in the Palestinian Authority.
The decision to transfer the funds came just 10 days after Hamas's victory in the Palestinian Legislative Council elections, and just two days past the date when the money transfer was due. Israel transfers the money - collected on behalf of the PA - on the third of each month.
Sunday's decision was made by a committee created to set policy toward the PA following the Hamas victory. The committee includes Acting Prime Minister Ehud Olmert, Defense Minister Shaul Mofaz, Internal Security Minister Gideon Ezra, Foreign and Justice Minister Tzipi Livni, Minister-without-Portfolio Tzahi Hanegbi and the heads of the security establishment.
Government officials said the decision to transfer the money was taken after it became clear that a transitional government was currently in place in the PA that did not include Hamas. Israel had been urged by the international community - foremost the US and Egypt - to transfer the money, since PA Chairman Mahmoud Abbas was still in charge and Hamas had not yet joined the government.
Israel also received assurances from Palestinian Finance Minister Jihad Wazir that the money would go to pay salaries and would not fall into the hands of Hamas.
Government officials said the decision was a tactical one taken because Israel did not want to bring about the collapse of the PA at this time and did not want to invite international pressure because of a failure to transfer the funds. The situation will be reassessed next month, Olmert said at the meeting.
The security services all recommended transferring the funds so the PA would not be plunged further into anarchy and chaos. The money is necessary for the PA to pay the January salaries of some 135,000 employees.
Prior to the meeting on transferring the funds, the weekly cabinet session heard various security briefings, with OC Intelligence Maj.-Gen. Amos Yadlin saying that there had been a dramatic rise in terrorist attacks and that there were now some 50 attempted terrorist attacks per week.
Yadlin said that in the last week alone 12 suicide bombers were thwarted at various stages of trying to carry out attacks. He said that terrorist organizations such as Islamic Jihad were trying to carry out the attacks to weaken the PA and challenge Abbas.
Likud Chairman Binyamin Netanyahu, meanwhile, blasted the decision, saying, "We are trying to create international pressure against Hamas, so every shekel we give to a Hamas-led government is unexplainable."
Former foreign minister Silvan Shalom said, "It is depressing that, despite Sunday's terrorist attack in Petah Tikva, the cabinet is acting as if nothing happened and passing a scandalous decision to give money to a Hamas government at a time when the world is stopping the flow of money to the PA. How can we ask the world not to fund Hamas when we are?"
Gil Hoffman contributed to this report.