Israel said on Friday it had paid US$100 million in frozen tax funds to the Palestinians and rescinded a contentious decision to authorize a new West Bank settlement, strengthening moderate President Mahmoud Abbas' hand ahead of crucial weekend talks in Damascus with his Hamas rivals.

Prime Minister Ehud Olmert's office said the payment, the first such transfer since the militant Islamic Hamas won control of the Palestinian government last March, was made Thursday night.

Defense Minister Amir Peretz, meanwhile, ordered plans for the Maskiot settlement frozen indefinitely "in order to look carefully at the implications," ministry officials said Friday, speaking on condition of anonymity because of the issue's sensitivity.

Israel's announcement last month that it had approved the construction of Maskiot to house settlers removed from the Gaza Strip in Israel's 2005 pullout, drew international condemnation.

It was the first new West Bank settlement officially approved since the early 1990s, when Israel promised to halt settlement construction as part of interim peace accords.

Israel has been trying to boost Abbas in his struggle with Hamas, which rejects the existence of a Jewish state in an Islamic Middle East. However, such efforts can backfire, as Palestinians of all stripes try to distance themselves from the Israelis.
 
Abbas is to travel to Syria today for talks with Hamas chief Khaled Mashaal, aiming at forging a coalition government and ending a punishing international aid boycott. Talks have sputtered for months amid clashes between each side's loyalists which have killed 35 people, but the fact that the two leaders were meeting hinted that an agreement might be finally at hand, though key obstacles remained.

Abbas said on Friday that if the latest round of talks fails he will call early elections, but acknowledged that Hamas could emerge the victor once again.

In another development, tentative talks between Israel and the Palestinians aimed at restarting the stalled peace process could begin next month, US Secretary of State Condoleezza Rice said during meetings in Europe to rally support from British and German leaders.

A three-way meeting with Israeli Prime Minister Ehud Olmert and Palestinian President Abbas would likely take place in the Middle East in the first half of February, but would not constitute formal negotiations, Rice said on Thursday.

Winding up a week-long tour of the Middle East and Europe, Rice briefed German Chancellor Angela Merkel in Berlin and said US, German and other diplomats would convene a Middle East strategy session early next month in Washington.

(China Daily via agencies January 20, 2007)