Contributed by Lucia in Spain
By Donald Macintyre in Jerusalem
"Israel has withheld part of its $75m (£38m) monthly tax revenue payment to the Palestinian Authority after a diplomatic offensive by the Prime Minister, Salam Fayyad, designed to stop the continued expansion of Jewish settlements.
The move appeared to mark a new low in relations between Israel and a moderate Palestinian leadership increasingly disillusioned by the lack of progress in talks with Ehud Olmert's government.
Israel has accused Mr Fayyad, who is widely respected by Western governments, of trying to "undermine" its relations with Europe. The Palestinian Prime Minister has written to all EU prime ministers urging them to shelve plans to upgrade the EU's relationship with Israel until it ceases to "flout its international obligations", including those on settlement construction in East Jerusalem and the West Bank......."
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