Palestinian Prime Minister-designate Ismail Haniyeh said on Tuesday it was too soon for Hamas gunmen to join Palestinian security forces although the organisation would form the next government, HAARETZ reported.

"It is too early to talk about this because there is a continued occupation and aggression against the Palestinian people," Haniyeh told reporters in Gaza after accepting a letter from Palestian Authority Chairman Mahmoud Abbas asking him to form a government.

Haniyeh will have up to five weeks to put together a coalition.

Abbas has urged Hamas to follow his guidelines and recognise past Palestinian peace agreements with Israel and commit itself to seeking statehood through non-violence. Hamas has rejected negotiating with Israel and said it has the right to pursue armed resistance instead. The group said it hoped to form a broad coalition with other factions.

Israel says it cannot consider dealing with Hamas until it

renounces violence, recognises Israel's right to exist and accepts past interim peace accords.

Olmert: There's still hope for peace talks

Meanwhile, Acting Prime Minister Ehud Olmert said Tuesday he was not ruling out the possibility that Israel would hold peace talks with the Palestinians, despite Hamas' overwhelming victory.

The chances of reaching a "quick agreement" with the Palestinians are smaller now that Hamas is in charge, Olmert said.

"But the hope has not disappeared and I am responsible for both things, the battle against Hamas and maintaining hope, the chance to reach an agreement," Olmert said.

Yaalon: disengagement empowered Hamas

The meeting between Hamas head Khaled Mashaal and Iranian President Mahmoud Ahmadinejad should concern Israel, former Chief of Staff Moshe Yaalon warned on Tuesday in a report on YNET.

Yaalon, who is currently conducting academic research in Washington, spoke at a conference sponsored by the Jerusalem Center for Public and State Affairs. In his speech, Yaalon referred to Hamas' win in the recent Palestinian elections and its implications, as well as the strategic threats facing Israel.

According to Yaalon, Israel's unilateral withdrawal from Gaza had a huge impact on public opinion in the Palestinian street who credited Hamas with forcing Israel to withdraw and voted for the group as a reward for its attacks against the Jewsih State.

"No doubt, the disengagement caused the reinforcement of Hamas and weakened Mahmoud Abbas" he explained. He referred in detail to the close relations between Hamas and Iran, which were evident in the warm welcome Tehran gave a Hamas delegation on a recent visit.

“Hamas’ victory poses a challenge to those interested in stability in the world and the Middle East, including Israel, the United States, Arabs and Palestinians who favor western democratic values to extremist Islam, Yaalon stated.

"In Hamas’ victory speech, leader Khaled Mashaal expressed the line of thought and the spirit pervading al-Qaeda, global Jihad, the Islamic movement and the Iranian regime – all of which direct their struggle against the West and its culture. Israel is the first target for occupation and destruction on the way to conquering the west and establishing a Muslim regime across the world,” Yaalon said.

Iran set to strengthen influence on PA

Yaalon added that Hamas’ victory will fuel the ambitions of Islamic groups in western-friendly Arab countries like Egypt and Jordan to depose the secular regimes. The former army chief noted that Iran will cash in on strong showing in parliament to gain more influence in the Palestinian Authority and radicalize its attitude towards Israel.

“The meetings between Khaled Mashaal and the Iranian president Mahmoud Ahmadinejad, before and after the elections should keep us awake at night. With or without western financial support, Iran will strengthen its influence on the Palestinian Authority, will back terror attacks against Israel, and will transfer knowledge, technologies and arms,” he said.

Yaalon hinted that Iran will seek escalation in the region to divert international attention from its clandestine nuclear program.

“We should suppose that despite the differences between Iran Shiite Islam and Hamas’ Sunni Islam, and all the ensuing disagreements, their common enmity to Israel will engender close cooperation,” Yaalon said

State Comptroller looking into Olmert real estate deal

Acting Prime Minister Ehud Olmert said Tuesday that he had disclosed all the details of the sale of his Jerusalem home to American real estate mogul Daniel Abrams in 2004, including "the price, the amount of rent, and how much each of our children received."

Olmert explained in an interview to Channel 1's Mabatthat he and his wife decided to sell the house that had "become too big for them" since their children were no longer living at home, and that like other Israeli parents, chose to use the money from sale to help their children.

The acting prime minister's sale of his home has recently come under inquiry by State Comptroller Micha Lindenstrauss, after certain irregularities in the purchase contract raised suspicion among authorities that Olmert may have accepted a bribe.

One aspect of the deal in particular appears to indicate a problem: the price for the sale of the house was $2.7 million (some NIS 12 million), a relatively high price for property in the neighborhood at the time of the sale, the NFC website reported Tuesday. Abrams has been a major contributor to a number of election campaigns, and has backed a number of public officials. Suspicions of bribery were bolstered when it appeared the deal was conducted through a foreign company registered in the Virgin Islands.

In addition, the terms of purchase stipulated that Olmert would be allowed to occupy the house until 2010 - a detail that raised questions, such as why the purchaser would allow Olmert to continue living in the house for six years beyond the date of the sale. However, the contract does require Olmert to pay rent until he vacates the property.

Lindenstrauss has requested a copy of the purchase contract from Olmert, who has yet to repsond to the allegations

“The Economist”: Israel’s economy will grow 4.3% in 2006

The projected growth rate is the same as predicted by the Bank of Israel, GLOBES reported.

“The Economist” poll of forecasters predicts that Israel’s GDP will grow 4.3% in 2006, compared with 5.2% in 2005. The projected growth rate is the same as predicted by the Bank of Israel, and higher than the 3.9% forecast by the Ministry of Finance.

The sources for “The Economist” poll of forecasters are ABN Amro, Deutsche Bank, Goldman Sachs, HSBC, ING Financial Markets, JP Morgan, Merrill Lynch & Co., UBS, and the “Economist Intelligence Unit”.

Only five of the 25 countries in “The Economist” emerging markets table are expected to achieve lower growth rates than Israel in 2006: Mexico - 3.5%; Brazil - 3.6%; Taiwan - 4.1%; Hungary - 4.2%; and Colombia - 4.2%.

“The Economist” predicts that China will have the fastest growth at 8.7%, after growing by 9.7% in 2005. China’s growth is propelled by the 2008 Beijing Olympic Games. India is projected to achieve 7.2% growth in 2006, after 7.7% growth in 2005.

Source: Israel Line - prepared by Yuval Lion at the Consulate General