Israel announced Monday it will release 250 Fatah captives in a goodwill gesture aimed at strengthening Palestinian President Mahmoud Abbas' support.
Israeli Prime Minister Ehud Olmert announced the move, aimed at boosting Abbas after Hamas' takeover of Gaza, at a peace summit in Egypt.
"As a gesture of good will towards the Palestinians, I will bring before the Israeli Cabinet a proposal to free 250 Fatah prisoners who do not have blood on their hands, after they sign a commitment not to return to violence," Olmert said in a speech.
The summit, which includes Abbas and the leaders of Egypt and Jordan, is at a Red Sea resort. Arabs and Palestinians are hoping the conference can push forward the peace process and strengthen Abbas' hand.
The meeting, only days after Abbas' rivals took control of the Gaza Strip in battles that raged for almost a week, was also held to showcase Fatah's willingness to move ahead with peace.
On the eve of the summit, Israel also released some of the US$550 million in funds it was holding as a goodwill gesture for the embattled region.
The money was originally withheld by Israel after Hamas came to power in 2006.
The financial sanctions meant that some 160,000 Palestinian Authority workers, including police officers, were not paid in more than a year.
Olmert expressed hope the meeting would kickstart renewed peace talks.
He said the Arab world "will see two very prominent national leaders shaking hands with the head of the Palestinian Authority and the prime minister of the state of Israel, together, expressing a genuine desire to build up a process focusing not on terror, not on hatred, not on rejection, not on fighting each other, but on making peace."
Meeting sends a message
Mideast experts agree the summit sends a message to the Arab world that there are viable alternatives to Hamas.
"It's important for them to be seen meeting, both in the diplomatic sense of them talking, but also in the sense of sending a warning to Hamas and it's leadership that they are going to be very isolated in the region and they're going to have to live with that," Middle East expert Michael Bell told Canada AM from Ottawa on Monday.
Abbas was expected to request all international funding to the Palestinian Authority be handed over to the new government he appointed last week.
According to Palestinian officials the new government, led by the appointed Prime Minister Salam Fayyad, does not include any Hamas members.
Hamas representatives were quick to denounce the new government and accused Abbas as being a collaborator with Israel and the U.S.
Hamas leader Ismail Haniyeh, who was ousted as prime minister, accused the Olmert of blackmail on Sunday, saying the money belonged to all Palestinians.
Abbas was also expected to demand at the summit that Olmert do away with some of the Israeli military checkpoints in the West Bank and to release Palestinian prisoners in Israeli jails.
Bell contends if Israel agrees to lighten its burden of occupation, the road to peace will appear to be more viable.
"There may be a possibility for Palestinians in the West Bank, for the Fatah leadership to move forward eventually towards a kind of peace agreement or peace negotiations. But that will depend a lot on the Americans and the Israelis in particular," Bell said.
Neighbouring leaders, such as Egypt's Mubarak and Jordan's King Abdullah II are wary that Hamas' takeover of Gaza could threaten Arab peace across the region.
Both countries have adopted pro-Western policies and have made peace with Israel, but both have powerful movements within the countries linked to Hamas.
With files from the Associated Press
