JERUSALEM, May 15 (Reuters) - Israel agreed on Sunday to release millions of dollars in suspended tax transfers to the Palestinian Authority
(PA) after receiving assurances the money will not fall into the hands of the Islamist group Hamas
Earlier this month, Israel blocked the routine handover of about 300 million shekels ($88 million) in customs and other levies it collects on behalf of the Palestinians after Western-backed President Mahmoud Abbas struck a unity deal
with his Hamas rivals.
Israeli Finance Minister Yuval Steinitz said at the time he would only allow the transfer after receiving guarantees the money would not reach Hamas, an Islamist militant group who runs the Gaza Strip and whose charter calls for Israel's destruction.
On Sunday, Steinitz approved the resumption of the transfers, saying in a statement that Israel received suitable clarifications that the money will not reach Hamas or be used to fund what he called terror activity.
He described the two-week freeze as a yellow card to the PA, and warned that if it eventually formed a unity government with Hamas, or if it started funding militant activity, Israel would again block the transfers.Salam Fayyad
, prime minister in Abbas's government, had sought international intervention to prevent the Israeli measure.
The PA is also heavily dependent on aid from donors including the United States, which has said its future assistance will depend on the shape of a new Palestinian government expected to be formed under the unity agreement.
Israel's leaders said the Palestinian unity deal was a blow to peace efforts.
The tax transfers provide the PA, which exercises limited self-rule in the West Bank, with $1 billion to $1.4 billion annually. Palestinian officials said they would not be able to meet their commitments, including paying salaries, without the funds.
(Reporting by Ali Sawafta and Ari Rabinovitch)