Arafat: Cease-fire talks continue with groups

RAMALLAH, West Bank (CNN) -- With Israel taking steps to ease conditions for Palestinians, Palestinian leader Yasser Arafat said Monday that he is still working with Palestinian factions on a possible cease-fire with Israel.

"Concerning the agreement of all the Palestinian groups, including Hamas, it is very important and will continue," said Arafat after a meeting with U.S. civil rights activist Jesse Jackson.

Reports indicated that Fatah, Arafat's faction of the Palestine Liberation Organization, and Hamas, a Palestinian fundamentalist group, were near agreement on a cease-fire declaration before last week's Israeli attack in Gaza. That strike killed Salah Shehade, commander of Hamas' military wing, and 14 others, including nine children.

Arafat said he was sorry that "what had been agreed upon" was affected by the Israeli action.

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On Monday, Israeli Defense Minister Benjamin Ben-Eliezer told the Knesset Foreign Affairs and Defense Committee that Shehade was planning simultaneous terror attacks in six Israeli cities.

The U.S. State Department has labeled Hamas a terrorist organization. The group's military wing, Izzedine al Qassam, has admitted responsibility for terrorist attacks against Israeli civilians as well as attacks against the Israeli military.

Israel easing Palestinian restrictions

Meanwhile, the Israeli government Monday announced steps to improve the life of Palestinians, lifting curfews in three cities indefinitely, allowing 12,000 Palestinian workers into Israel and transferring the first installment in frozen tax revenue to the Palestinian Authority.

Israeli Prime Minister Ariel Sharon appointed Foreign Minister Shimon Peres to coordinate with Palestinians on the measures.

But chief Palestinian negotiator Saeb Erakat, who also met with Jackson, called the promise to ease restrictions a "media bluff."

A statement from Sharon's office said aid agencies will be allowed to move "as unimpaired as possible" in the Palestinian territories.

Curfews were lifted indefinitely in the West Bank towns of Qalqilya, Tulkarem and Hebron.

Sharon's office said the Israel Defense Forces would lift roadblocks, ease conditions for entry by merchants into Israel, expand fishing zones in Gaza and improve passage of public transportation. A statement said the moves were "toward the facilitation of daily life for the civilian population not involved in terrorism."

Sharon also ordered the immediate transfer of a portion of tax funds being withheld by Israel to the Palestinian Authority. The money was frozen after the current intifada began in September 2000.

The funds, estimated at $15 million, were to be handed over to Palestinian Authority Finance Minister Salam Fayed.

Arafat told reporters that Israel had turned over the money and that the Israelis had promised more in the future.

The Israeli government has said it feared that the money would end up in the pockets of terrorist groups because of corruption in the Palestinian Authority.

In other developments, Ben-Eliezer said he hoped to meet Palestinian officials, perhaps as early as Tuesday, to discuss security issues.

Ben-Eliezer told Israeli Army Radio he likely would meet with Palestinian Interior Minister Abdel al Razek Yehiyeh.

Israel Radio reported the IDF had arrested two senior Hamas military leaders near Ramallah.

In addition, Israeli Justice Minister Meir Sheetrit promised to deal with rioting Jewish settlers with "an iron fist" after a Sunday clash with Palestinians in Hebron, according to Israel Radio.

The outbreak occurred after the funeral procession of an IDF soldier who was the victim of a Friday ambush by Palestinian gunmen.

Israeli settlers rioted, Palestinian and Israeli sources said, killing a 13-year-old Palestinian girl, Nazin Jamjoum, and wounding 21 other Palestinians and 15 Israeli policemen.