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Last Updated: Thursday, 14 December 2006, 19:07 GMT
Palestinian PM denied Gaza entry
Palestinian PM Ismail Haniya
Mr Haniya was returning to Gaza from a foreign tour
Israel will allow Palestinian PM Ismail Haniya to return to Gaza from Egypt but without tens of millions in donations, Egyptian and Israeli sources say.

The money would be left on the Egyptian side of the Rafah crossing, they said.

Israel earlier ordered the closure of Rafah to stop the return of Mr Haniya, of Hamas, sparking an angry reaction from militants, who stormed the post.

It is not known if Mr Haniya can return on Thursday as European monitors at Rafah will not be back until Friday.

At Rafah, Hamas gunmen went on a rampage, occupying the terminal.

They smashed windows and furniture inside the building and fired shots into the air. At least three people are reported to have been injured.

'Factional tension'

Israeli Defence Minister Amir Peretz had ordered the EU monitors to close Rafah.

Mr Haniya had been due to return to Gaza on Thursday after cutting short his first trip abroad as prime minister to deal with mounting tensions between Hamas and rival faction Fatah.

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Inter-faction tensions have increased since the killing of three sons of a pro-Fatah security chief on Monday.

Israel said Mr Haniya would only be allowed to cross into Gaza if he left the money - reported to total more than $30m (15.3m) - on the Egyptian side.

Israel says that money, in particular from Iran, goes directly to the funding of "terrorist" operations against Israel.

Hamas has been hit by a Western-led boycott of its government and officials have had to carry in millions in cash.

There are conflicting reports about what will happen to the latest donations now.

Hamas sources said others in Mr Haniya's delegation would bring them in later while Egyptian sources said they would be transferred to a Palestinian Authority account via an Egyptian bank.

Israel Radio said the cash would be transferred to the bank account of the Arab League on Friday.

Palestinian and Egyptian officials say Mr Haniya's convoy is making a second attempt to cross but it is unclear when the border point will reopen.

'Chaos'

The closure sparked gunfire at the crossing point.

The Palestinian presidential guard, responsible for security there, began firing at Hamas militants, according to an Associated Press news agency journalist at the terminal.

Militants chanting "God is great" took over the hall.

Travellers took cover and a leading Hamas official tried to get the militants to disperse, the agency said.

"There is chaos here," said Presidential Guard spokesman Wael Dahab.

There were also unconfirmed reports of two loud explosions that had blown a hole in the Gaza-Egypt border.

Maria Telleria, spokeswoman for the EU monitoring mission, said all 16 monitors had been safely evacuated.

The border is operated by European observers who have to travel from Israel to get to it.


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The scenes at the border crossing





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