Israel to Let Arab Moderate Reopen Office
— Israeli security officials reached a face-saving compromise today with a leading Palestinian moderate, Sari Nusseibeh, to allow him to reopen his office here. Its closing brought Israel a rare rebuke from the Bush administration.

At the same time, Israeli officials continued to hold out the prospect that they might ease the plight of other Palestinians by releasing some of the hundreds of millions of dollars in tax revenue Israel has withheld from the governing Palestinian Authority and withdrawing from some of the West Bank territory that Israel has seized.

Israel said it released $20 million of the sequestered Palestinian money today. But there was no immediate sign of a more substantial concession of money or land, and Palestinian officials dismissed the Israeli proposals as mincing.

Israeli officials seem anxious to avert what Palestinians, aid workers and diplomats call a looming human crisis as the army continues to maintain 24-hour curfews, with sporadic breaks, in seven of the eight major Palestinian cities and towns in the West Bank. A recent study has shown significant malnutrition among Palestinian children, diplomats familiar with its results said.

Although Israel has taken control of most of the West Bank and accused the Palestinian Authority of sponsoring violence against Israelis, it appears reluctant to shoulder the costly burden of providing services like education and garbage pickup to the Palestinians.

Foreign Minister Shimon Peres told Israel Radio today that the government was prepared to withdraw troops from some West Bank cities and to release 10 percent of the $600 million it has withheld over the course of the 22-month conflict.

Israel collects the money under the terms of the Oslo agreement — which set forth steps toward peace and for self-governance by the Palestinians — but says it has withheld the money because it may be used to kill Israelis.

Mr. Peres spelled out conditions for his proposed steps: none of the tax money could be diverted to finance terrorism — a condition that seemed intended to draw in the United States or another party as a monitor — and the Palestinian security services must ensure Israeli security in areas from which the army withdraws.

That second condition has been negotiated repeatedly over the last year and a half as Israel's forces seized West Bank land in what it called efforts to prevent or punish Palestinian attacks. But it has never been achieved for long.
http://www.nytimes.com/2002/07/23/international/middleeast/23MIDE.html