Jerusalem - The Israeli cabinet decided Sunday to immediately freeze the transfer of about $50 million a month in tax and customs receipts due to the Palestinian Authority, arguing that the swearing in of a Hamas-dominated legislature on Saturday meant that the Palestinians were now led by the militant group.

"It is clear that in the light of the Hamas majority in the parliament and the instructions to form a new government that were given to the head of Hamas, the Palestinian Authority is in practice becoming a terrorist authority," Ehud Olmert, the acting prime minister, told his cabinet. "The state of Israel will not agree to this."

Although the cabinet decided to hold back on other penalties it had been considering, its move to withhold the receipts immediately put it at odds with its main ally, the United States, and the rest of the so-called quartet - the European Union, Russia and the United Nations - that has been promoting peace efforts between Israel and the Palestinians.

The quartet has said that its financing for the Palestinian Authority will continue until a new Hamas-led government is in place, a process that could take five weeks or longer. Even as Israel acted to cut off money to the Palestinians, the quartet's representative, James D. Wolfensohn, was in the Middle East talking with Arab countries in the Persian Gulf region to try to raise money for the Palestinian Authority until Hamas fully takes over the government.
The State Department said it would have no comment on the Israeli decision.

Full story : http://www.nytimes.com/2006/02/20/international/middleeast/20mideast.html?_r=1&th&emc=th&oref=slogin

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