Israel said yesterday it had begun transferring to the Palestinian Authority some of the hundreds of millions of dollars in tax funds it had frozen for 17 months, hoping to bolster President Mahmoud Abbas while isolating Hamas.

Israeli Prime Minister Ehud Olmert said steps taken by Abbas to try to rein in militants since Hamas' violent takeover of the Gaza Strip last month could also lead to progress on the diplomatic front, but he offered no specifics.

Israel started withholding the tax revenues -- the main source of funding for the cash-strapped Palestinian Authority -- on February 1, 2006 after Hamas, the Islamist militant group, trounced Abbas' secular Fatah faction in parliamentary elections in January.

Olmert spokeswoman Miri Eisin said Israel was resuming the tax revenue transfers to the emergency government set up by Abbas in the occupied West Bank after he dissolved a unity administration led by Hamas.

Israeli officials said the first payment to Abbas' government would be at least US$50 million, about a month's worth of revenues. The transfer began yesterday but may not reach the Palestinians until today.

Eisin said the tax money transferred to the emergency government could be used to pay long-overdue salaries, fund development projects and provide public services.

In addition to resuming normal tax revenue transfers of US$50 million to US$60 million at the start of each month, Israel said it would transfer all of the accumulated frozen funds to Abbas' government in five or six installments over the next six months.

Palestinian officials say Israel is holding more than US$700 million of the tax revenues collected since February 2006.

(China Daily July 2, 2007)