JERUSALEM/AMMAN, 25 June 2007 — Israel agreed yesterday to begin releasing hundreds of millions of dollars in frozen tax funds to Palestinian President Mahmoud Abbas, part of a package of planned goodwill gestures meant to strengthen the moderate Palestinian leader in his standoff against the Islamic group Hamas.

The decision to unfreeze the money came a day before Prime Minister Ehud Olmert heads to Egypt for a high-profile summit with Abbas, President Hosni Mubarak of Egypt and Jordanian King Abdallah. The gathering is meant to give Abbas a high-profile display of support against his Hamas rivals, who violently seized control of the Gaza Strip in a bloody rout of Abbas’ Fatah movement earlier this month.

But Olmert sought to play down expectations ahead of the summit, telling his Cabinet not to expect a “dramatic breakthrough” at the gathering. “We have an interest in having this meeting, but I don’t want anyone to think we’re on the brink of a dramatic breakthrough,” Olmert told the ministers, according to a meeting participant. The participant spoke on condition of anonymity because Olmert spoke in a closed meeting.

The Palestinian infighting has left the Palestinians with two governments — Abbas’ new Cabinet in the West Bank, and the Hamas rulers in Gaza. Israel and moderate Arab leaders have joined together in support of Abbas, a moderate who favors peace with Israel, while trying to isolate Hamas, a radical group pledged to Israel’s destruction.

Olmert aide David Baker said in the current environment, it is premature to begin talks on a final peace deal, despite calls from the Palestinians and other Arab countries to do so. Israel is prepared to discuss “a political horizon,” he said. “These talks do not include final status issues, but rather how the prime minister and the president of the Palestinian Authority would envision a future Palestinian state.”

Deposed Palestinian Prime Minister Ismail of Hamas, speaking in Gaza, called hopes for the summit “illusions” and a “mirage.” He said, “the Americans won’t give anything. Israel won’t give us anything. Our land, our nation will not come back to us except with steadfastness and resistance,” a code word for attacks against Israel.

In Amman, Abbas said yesterday he received US and Israeli assurances that the Jewish state was ready to make progress at the summit meeting in Egypt, the official Jordanian news agency Petra reported. Abbas was visiting Abdallah ahead of the meeting in the Egyptian Red Sea resort of Sharm El-Sheikh.

When asked if Israel was ready to make any offers in Sharm, Abbas told Petra, “I received promises from American and Israeli sides.” “What’s more important is to implement these promises on the ground,” he added, following a closed-door meeting with Jordan’s king in Amman.