Israeli strikes kill six in Gaza

Israeli troops, backed by tanks and helicopter gunships, killed at least six Palestinian militants today in one of the military's largest strikes since re-entering the Gaza Strip over the summer.

An Israeli soldier also was killed in the operation against rocket launchers in the northern Gaza town of Beit Hanoun, the army said.

Despite the large-scale action, Israel decided today not to expand its four-month-old military offensive in Gaza, even though Israeli Prime Minister Ehud Olmert had said earlier in the week that a broader operation was in the works.

Infantry, tanks and aircraft pummeled Beit Hanoun, which the military said was a staging ground for launching 300 rockets at Israel since the beginning of the year. Two homemade rockets fired from elsewhere in Gaza fell in the southern Israeli town of Sderot today, slightly injuring one person, the army said.

Palestinian hospital officials reported 33 wounded, most of them gunmen, but including a woman and an 11-year-old boy.

Dr Jamil Suleiman, director of the Beit Hanoun hospital, said all of the hospital's blood supplies had been used up.

Israel, which evacuated Gaza in September 2005, re-entered the coastal strip to try to recover a soldier captured in June by militants linked to the Palestinians' ruling Hamas party. The soldier remains in captivity, but the military has since broadened its objectives in Gaza to crush militants' rocket-launching capabilities.

An army spokesman said the operation on Wednesday was one of the largest in Gaza since the offensive began in late June.

But an inner Cabineet of ministers decided not to escalate Israel's offensive against rocket launchers and arms smuggling operations along the Egypt-Gaza border. On Monday, Olmert had told parliament's powerful Foreign Affairs and Defense Committee that the military incursion would be widened.

A senior Cabinet official, speaking on condition of anonymity because he wasn't authorized to discuss policy with the press, said the ministers endorsed the more moderate approach of Defense Minister Amir Peretz.

Government spokewoman Miri Eisin said the inner Cabinet reserved the right to conduct a large-scale operation in the future, but would have to meet again to approve one.

The office of Palestinian President Mahmoud Abbas issued a statement condemning Wednesday's operation and urging the international community to take action to halt the incursion.

Hamas government spokesman Ghazi Hamad accused Israel of deliberately keeping Gaza mired in chaos to give itself "a green light in order to continue aggression against our people." Hamad also urged the international community "to take a serious step to stop this crazy attack from the Israeli side."

Israel, which is boycotting the Hamas government for refusing to disarm and recognize the Jewish state, had taken tentative steps in June to resume long-stalled peace talks with the moderate Abbas. But those efforts were cut short by the soldier's capture and the subsequent Israeli offensive.

The monthlong war between Israel and Lebanese Hezbollah guerrillas dealt another setback, causing Olmert to shelve his plan to withdraw unilaterally from much of the West Bank. And the expansion of the Israeli government this week to include an ultrahawkish party made a new peace drive unlikely anytime soon.

Separately, the International Monetary Fund reported Wednesday that the Palestinian Authority's income fell by 60 percent after Hamas took power in March, even as the government payroll expanded, creating an increasingly unsustainable situation.

Both Israel and Western powers cut off the flow of funds to the Hamas-led government in an effort to pressure the Islamic militant group to disarm and recognize the Jewish state.

Between April and September, the government took in just US$500 million (¤394 million) , down from more than US$1.2 billion (¤950 million) in the same period in 2005, the International Monetary Fund reported. Much of the drop was due to Israel's refusal to turn over an estimated US$360 million (¤284 million) in taxes it collects on behalf of the Palestinians, the report said.

Despite an international aid boycott of the Hamas-led government, some US$420 million (¤331 million) in foreign aid reached the Palestinians between April and September, more than in all of 2005. The bulk of the aid, some US$300 million (¤236 million), came from Arab countries and bypassed Hamas.

About 80 percent of the US$500 million (¤394 million) in income in the past six months was spent on the ever-expanding government payroll and on fuel imports, leaving little for other budget items, such as welfare payments, the report said.

The report said the number of civil servants grew by 5,400 this year, to more than 142,000 in mid-June. Most of the hiring took place in the security services, and some 20,000 new recruits are currently being trained and could be added to the payroll in the future, the report said.

It now costs about US$100 million (¤79 million) a month to cover salaries for government workers, compared to about US$80 million (¤63 million) a month in mid-2005. The increase is also due to a generous across-the-board pay increase in late 2005.

"The government wage bill had already become unaffordable at the end of 2005," the report said. "Underlying the current fiscal difficulties is an increasingly unsustainable fiscal situation."