Hamas unrepentant as Israel imposes sanctions

Israel has imposed sanctions on the Palestinians after President Mahmoud Abbas charged Hamas with forming a government. Ehud Olmert, the acting Israeli Prime Minister, said: "The Palestinian Authority is in practice becoming a terrorist authority. We will not agree to this."

Yesterday, his government voted to withhold the about £30m a month it collects in tax revenues for the Palestinians and barred Hamas MPs and other VIPs from crossing Israeli checkpoints. It will boycott all bodies in which Hamas plays any part. Israel appealed to foreign governments to stop transferring aid money to the Palestinian Treasury, and announced that henceforth it would block military assistance to the Palestinian security services.

The tax revenues fund about half the payroll of the PA, which could be forced to dismiss tens of thousands of workers. Salah Bardawil, a Hamas spokesman, denounced Israel and the United States for trying to scare them. "Israel is trying to strangle us and hit us where it hurts," he said, "but we will not sell our principles. Europe and the Arab countries will find themselves in an embarrassing situation if they collaborate with Israel in imposing a financial siege."

Israel will deposit the tax revenues into an escrow (trust) account. Mark Regev, a Foreign Ministry spokesman, said that the money would stay there even if Hamas appointed a finance minister from outside its own ranks. "There's always going to be a fear," he said, "that money transferred today will come back to haunt us tomorrow in the form of suicide bombings."

Mr Olmert hinted that other measures might be introduced in the future. But ministers rejected more draconian penalties, such as a blockade, recommended by the defence establishment. The more measured approach of the Foreign Ministry prevailed as Israel did not relish being blamed for causing a humanitarian catastrophe. It also did not want to jeopardise the consensus it has built with the United States, Europe and the United Nations for pressuring Hamas to recognise Israel, renounce violence and honour existing agreements.

The immediate aim is to confront the Palestinians with the consequences of voting for Hamas, which won 74 of 132 seats in the legislature, but without causing a total collapse of the Palestinian economy. Israel is urging donor countries to channel funds via non-governmental organisations.

Mr Olmert said: "Israel will not compromise with terrorism and will continue to fight it. However, there is no intention of harming the humanitarian needs of the Palestinian population."

As an example of the new tough line, Israel announced yesterday that customs officers at Ashdod Port had seized 31 containers of cargo, worth millions of dollars, imported by a Gaza company. Shaul Mofaz, the Defence Minister, accused Fayez Abu Amar of "systematically and continuously assisting Hamas and Islamic Jihad by laundering and transferring funds from the organisations' overseas command centres to the local operatives under the guise of commercial activity".

Israeli air and ground forces also killed four Palestinians in the West Bank and Gaza yesterday. Two teenagers died when troops fired on rioters in the Balata refugee camp near Nablus after they had gone in to search for wanted gunmen. An air strike killed two men suspected of planting bombs near the Kissufim crossing between Gaza and Israel.

Hamas has nominated Ismail Haniyeh, the head of its more pragmatic wing, for the premiership. The 46-year-old former dean of Gaza's Islamic University survived an Israeli assassination attempt in 2003. He rose in the hierarchy after Israel killed Sheikh Ahmed Yassin and his successor, Abdel Aziz Rantisi.

Although it could form a government on its own, Hamas is seeking a coalition with Mr Abbas's Fatah to enhance its interna- tional legitimacy. But Abdullah Abdullah, a Fatah MP, said: "So far, our answer is no. We have been in power for 40 years. It will be hard to adapt, but let's see how Hamas deals with the problems."

Adnan Asfour, a member of the Hamas political bureau, said they were approaching potential partners with an open mind, but drew the line at recognising Israel. "We are ready to compromise, but without killing our dreams."