Movement between the West Bank and Gaza is severely restricted
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Israeli and Palestinian officials have reportedly agreed in principle to a safe passage between the West Bank and the Gaza Strip after Israel's pullout.
In the short-term, Israeli security forces will escort Palestinian vehicles, Israel radio reported.
A new railway line or road link are also being considered for the future, according to the report.
Senior Israeli and Palestinian officials are also due to hold talks on the transfer of Bethlehem on Tuesday.
Sunken highway
The movement of people and goods between the West Bank and Gaza has emerged as a key issue, weeks before Israel begins its planned pull-out from the coastal strip.
At present, tough Israeli security measures make it extremely difficult for Palestinians to travel between the two territories.
According to Israel radio, officials involved in co-ordinating the withdrawal have agreed in principle to the creation of a safe passage.
Initially, Palestinians will be able to travel between the West Bank and Gaza if accompanied by Israeli security forces, it says.
A longer term plan envisages either a rail link between Erez Crossing in northern Gaza and the Tarqumiya checkpoint near Hebron in the southern West Bank, or a road highway, according to the radio report.
A rail link is estimated to cost $175m, while the road - a sunken highway with no exits - would likely cost $130m.
Both plans are being examined by the so-called Quartet (US, UN, EU and Russia) and the World Bank.
Transfer talks
In a separate development, Israeli Defence Minister Shaul Mofaz and Palestinian Interior Minister Nasser Yusuf were due to meet on Tuesday to discuss the transfer of Bethlehem to Palestinian control.
Israel pledged to hand over the town at the Sharm al-Sheikh summit between Israeli Prime Minister Ariel Sharon and Palestinian leader Mahmoud Abbas in February.
However Israel froze the transfer, along with that of Ramallah and Qalqilya, accusing the Palestinian Authority of not doing enough to tackle anti-Israeli militants.
The Palestinians have accused Israel of deliberately dragging its feet on implementing its obligations.
At a meeting with members of parliament, Mr Mofaz said about 43,000 soldiers and police would be deployed in the Gaza Strip to implement Israel's planned withdrawal.
He also said the operation to withdraw settlers would take no more than four weeks and the army would remain for several weeks after that to complete the evacuation of its bases.
Seventeen battalions of reservists will be called up to replace those being sent to Gaza, he said.