Israeli set to pull Gaza strip

Israeli Prime Minister Ariel Sharon cleared a major hurdle to a planned Gaza pullout, winning the support of a key opposition party for the state budget and avoiding an election that could have delayed the withdrawal.

In another boost for Sharon, U.S. Secretary of State Condoleezza Rice made clear on Sunday Washington was sticking to its support for Israel’s intention to retain large West Bank settlement blocs in any final peace deal with the Palestinians.

“The budget will pass now,” Sharon was saying after talks with Lapid at the prime minister’s ranch in southern Israel.

Sharon ended weeks of political uncertainty when he wrapped up a deal on Saturday with Yosef Lapid, head of the opposition Shinui party, to support the budget. Defeat in a parliamentary vote later this week would have triggered a new election by law.

“While we will not prejudice the outcome of final status negotiations, the changes on the ground, the existing major Israeli population centers will have to be taken into account in any final-status negotiations,” Secretary of State Condoleezza Rice told Israel Radio.

Rice said she was trying to clear up confusion after an Israeli newspaper quoted Dan Kurtzer, U.S. ambassador to Israel, as saying no such commitment existed. Kurtzer denied the report.

Rice again voiced concern over Israeli plans to build 3,500 homes at a Jewish settlement near Jerusalem; an expansion project Palestinians said would cut them off from parts of the city they hope to make the capital of a future state.

She said the matter would be “discussed” with Israel.

Palestinian Deputy Prime Minister Nabil Shaath voiced dismay at Rice’s remarks. He said Israel would use the Gaza withdrawal as cover for “stealing the rest of the territories, including Jerusalem”, dimming Palestinian hope for a viable state.

Palestinian officials also objected to word from Israel that it would delay the handover of the third of five West Bank cities to Palestinian control agreed at a Feb. 8 ceasefire summit between Sharon and Palestinian President Mahmoud Abbas.

Political sources said Israeli Defence Minister Shaul Mofaz would put off the transfer of Qalqilya due this week because Palestinians had not seized weapons as promised from 52 militants in towns already turned over, Tulkarm and Jericho.

Prime Minister Ariel Sharon told his Cabinet on Sunday there is no need to clarify U.S. policy on Jewish settlements, saying Washington supports Israel’s retention of West Bank blocs as part of a final Mideast agreement but opposes continued settlement building at this time.

“The Americans are in favor of keeping the settlement blocs and there is a clear understanding about this,” Sharon told his Cabinet.

Sharon accused unidentified ministers of twisting Kurtzer’s words in an effort to bring down his government as it plans to carry out the pullout from Gaza and four small West Bank settlements this summer.

“This was an attempt to bring down the government,” Sharon said. “What worries me is that people are ready to sacrifice Israel’s strategic interests with the U.S. for the benefit of personal interests.”

He did not identify the ministers he believed were behind the leak. The newspaper report was based on a Foreign Ministry document. At the meeting, Foreign Minister Silvan Shalom criticized the leak and said he was willing to be investigated as its possible source.