Israel approves settlement cash

It is understood most of the money will fund Jewish settlements

Israel's government has approved a $22m budget mainly for building Jewish settlements on occupied land.

The move has outraged Palestinians, coming two weeks after Israeli Prime Minister Ariel Sharon pledged to remove all settlements from the Gaza Strip.

Israeli officials did not say where the cash would go; correspondents say it is understood most of it will go to the West Bank and east Jerusalem.

It is also likely to fund new housing in Israel's Negev desert and Galilee.

Under the terms of the road map peace plan Israel is obliged to freeze all settlement activity in the West Bank and in Gaza, which were occupied by Israel after the 1967 war.

These fat pipes that have been pouring Israeli tax-payer money into the West Bank and Gaza Strip will not be cut off Dani Yatom Labour Party MP

The BBC's Matt Prodger, in Jerusalem, says the announcement of the funding comes at a time when the Israeli economy is struggling.

And the funding decision - by the finance committee of the Israeli parliament - drew criticism from Israeli opposition MPs.

"These fat pipes that have been pouring Israeli tax-payer money into the West Bank and Gaza Strip will not be cut off," the Labour Party's Dani Yatom told Israel Radio.

The money for the settlements was originally allocated as housing assistance for young couples and low-income families in Israel.

Meanwhile, the prominent Palestinian negotiator Saeb Erekat accused Israel of jeopardising peace hopes.

"At a time when they speak about withdrawing settlements from Gaza, they allocate millions of dollars for settlements throughout the West Bank and Gaza," he said.

US envoys are expected to visit Israel on Wednesday to discuss reviving the peace process.

Hardline alternatives

Prime Minister Sharon's plan to uproot the Gaza settlements has faced mounting resistance from Jewish hardliners.

Mr Sharon survived a no-confidence motion on Monday

Israeli housing minister Effi Eitam said on Tuesday he would propose new laws to make it illegal for Israel's army to evacuate settlers and dismantle their homes.

Another hardline member of Mr Sharon's cabinet, Zvi Hendel, is trying to rally support for a plan that would see Israel tighten its hold over outlying West Bank settlements in exchange for giving the Palestinians control of Arab-dominated towns within Israel.

Transport minister Avigdor Lieberman, of the far-right National Union party, has suggested a plan that would see the Palestinians confined to four isolated zones in the West Bank.

However, Ariel Sharon survived a no-confidence motion brought against his government on Monday.

Palestinian pay dispute

Meanwhile, Palestinian Prime Minister Ahmed Qurei has dismissed reports he was threatening to resign because of an argument with Yasser Arafat.

The two men have been at loggerheads after Mr Qurei backed a financial reform that was set as a precondition for much-needed aid from the US and Europe, Palestinian cabinet ministers say.

The reform was intended to make payments to Palestinian security personnel more accountable, with salaries being sent directly to personal bank accounts.

Under the current system, lump sums of cash are handed to officers for distribution further down the ranks - a recipe for corruption and misuse, say international donors.

Palestinian cabinet ministers say Yasser Arafat has argued with Mr Qurei about the reform and is unwilling to implement it.

He is reported to be particularly angry that 30,000 security personnel under his command will be affected by the new rules.