Israel unleashes cash weapon

Barak predicts clashes with Palestinians will continue

Israeli Prime Minister Ehud Barak has said there is no miracle cure to the conflict with the Palestinians while revealing that cash payments to the Palestinian Authority were now being withheld.

Mr Barak said millions of dollars in tax collected by Israel for payment back to the Palestinians would not be handed over.

The money that was to have been transferred to the Palestinian Authority... has not been for a few days and that will continue for as long as necessary

Ehud Barak

His comments came hours after Israeli combat helicopters launched rocket strikes on five different Palestinian locations and a village outside Jerusalem, killing a German doctor and injuring around 10 Palestinians.

Funerals were held on Thursday for some of the eight Palestinians shot dead in Wednesday's fierce clashes in the West Bank and Gaza.

Several new clashes were reported - witnesses said two Palestinians had been shot dead in separate incidents near Hebron in the West Bank.

In a separate development, one report said a bomb targeting an Israeli patrol had gone off, in the disputed Shebaa Farms area near the Lebanese-Syrian border. There were no reports of casualties.

The revelation that financial tactics are now being against the Palestinians came during comments from Mr Barak on Israel radio.

The money being withheld is believed to total tens of millions of dollars a month, and is expected to have a severe impact on the working of the Palestinian Authority.

"The money that was to have been transferred to the Palestinian Authority under the agreements concluded has not been for a few days and that will continue for as long as necessary," Mr Barak told army radio.

No end in sight: Barak says the conflict will be a long one

Mr Barak also told Israelis they should not expect an early end to the crisis, which has claimed about 230 lives, most of them Palestinian.

"We are in for a long battle that will really decide our future in this country and it is a complex battle," Mr Barak told Israeli radio.

As he made his remarks, the United States was renewing efforts to broker a ceasefire.

Talks bid

US Middle East envoy Dennis Ross met Palestinian leader Yasser Arafat for around two hours, and said he still hoped peace negotiations could be resumed before President Clinton left office in January.

Mr Ross had already met Mr Barak, who made clear once again that there would be no peace talks with Mr Arafat until the violence stopped.

Israel's pre-dawn raid on Thursday marks a possible change in tactics, say correspondents.

More than 200 funerals have taken place

Extensive attacks were launched on suspected bases of Mr Arafat's Fatah faction in the West Bank - apparently in retaliation for Monday's killing of four Israelis.

Rockets were fired at five different targets, including what the army says was a Palestinian munitions dump near Jericho.

In Beit Jala, on the outskirts of Jerusalem, Israeli helicopters opened fire with their machine guns and launched rockets in response to what they say was Palestinian gunfire directed towards the Jewish settlement of Gilo.

'Change in tactics'

The Israeli army says it believes the buildings it targeted were uninhabited during the night.

However, no warnings were given by the military prior to the attacks - a departure from normal policy - our correspondent in Jerusalem, Hilary Andersson, says this marks a clear change in Israeli tactics.

In Thursday's reported unrest, Israeli soldiers shot and wounded six Palestinians at a funeral in Khan Yunis in the southern Gaza Strip.

Three others were injured at the Karni crossing point.