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Israeli leader lauds new government

Says Palestinians could be 'serious partner' for peace

NEW YORK -- Prime Minister Ehud Olmert of Israel expressed hope yesterday that the new Palestinian government would be a "serious partner" for peace and promised to consider releasing hundreds of millions of dollars in frozen tax funds.

Palestinian President Mahmoud Abbas called for the new government after the Hamas militant group seized control of the Gaza Strip. In response, Abbas dissolved a coalition government between Hamas and his Fatah movement and appointed Salam Fayyad, a Western-backed economist, to form a new government.

Olmert arrived early yesterday in New York, where he met with U N Secretary General Ban Ki-moon. Today, he heads to Washington to meet with top administration officials. Tomorrow , he plans to meet with President Bush.

Israel will work toward peace with the new Palestinian government if it turns out to "be a serious partner in the West Bank," Olmert told Ban, according to an Israeli official at the meeting.

He indicated that Israel could ease travel restrictions on the West Bank and release tax receipts frozen after the Hamas-led government took power last year.

"Israel will give tax money to a serious and responsible government," he told Ban. "We can expect a dramatic change in access and movement of Palestinians into the West Bank."

Before leaving for New York, Olmert told reporters the new government means a "new opportunity" for peace "that we haven't had in a long time."

Hamas's bloody takeover of the Gaza Strip looks certain to dominate talks in Washington. The victory by the Islamic militants -- routing the forces of the moderate Fatah movement -- has turned the Israeli-Palestinian conflict inside out, creating both challenges and opportunities for Israel and the United States. Olmert is likely to spend most of his visit with Bush coordinating a strategy that would shun Hamas in Gaza while bolstering Fatah in the West Bank.

In his meeting with Ban, Olmert raised the issue of placing an international peacekeeping force between Gaza and Egypt, though Egypt and Hamas are likely to object to the proposal, a senior government official said on condition of anonymity because of the sensitive nature of the talks.

Ban, in a brief statement, said he was closely monitoring the situation in Gaza, where 80 percent of the population is supported by the United Nation .

"The world is gravely concerned about the deteriorating situation in Gaza and in the region," he said.

Israeli government spokeswoman Miri Eisin said Olmert and Bush would discuss a broad range of issues, but that the developments in Gaza would be central.

On Saturday, the U S consul general in Jerusalem, Jacob Walles, said an international aid embargo imposed after Hamas won parliamentary elections last year will no longer apply to Abbas's government, and that he expected it to be lifted by next week.