Israeli reprisal kills 3 Gaza militants

Talk of peace?
This week Hamas marks the first anniversary of its violent takeover of the coastal strip from security forces affiliated with moderate Palestinian President Mahmoud Abbas. The group rejects the Jewish state's right to exist and has said publicly it wants a truce to rearm and regroup.

Adding urgency to Israel's decision are assessments by its military intelligence that Hamas is rapidly upgrading its arsenal with Iranian assistance. Brig. Gen. Yossi Baidatz, a senior intelligence officer, told the Cabinet on Tuesday that Hamas now has rockets with a range of 12 miles, endangering a significant swath of southern Israel. Militants are also increasingly using deadlier 120mm mortar shells instead of smaller ones, Baidatz said, according to a participant in the meeting.

While battling militants in Gaza, Israel has been trying to pursue peace with Abbas and his West Bank government. Peace talks resumed at a U.S.-sponsored conference in November after seven years of violence, but have been marred by the same problems that have derailed earlier rounds of talks — Palestinian complaints about Israeli settlement construction in the West Bank and Israeli concerns that Palestinians are far from ready to assume responsibility for security.

On Tuesday, a politically charged tax transfer from Israel reached the Palestinian treasury a week late, Yusuf Zumor of the Palestinian Finance Ministry confirmed.

Israel said it withheld nearly a third of the $75 million to cover Palestinian debts to Israel's electric company and to Israeli hospitals that treated Palestinians. But it appears the delay was at least partly a punitive measure taken by Israel because Prime Minister Salam Fayyad lobbied European nations not to boost their relations with the Jewish state.

Fayyad exhibited "a kind of behavior that, in terms of our relationship with the Palestinians, we should not have seen," Israeli Finance Minister Roni Bar-On told reporters on Tuesday.

Israel collects certain tax revenues for the Palestinians and transfers the money each month, deducting money the Palestinians owe Israel for electricity and medical costs. The revenues go to pay the salaries of Palestinian government workers, whose wages were delayed because the transfer was overdue.

More from msnbc.com Power struggle threatens Pakistan’s leader  Swine flu booster shots? Good luck with that From Levi to Letterman: Palin's rough year Obama gets mixed reviews on China's blogs Ice addict heads for poles, Everest | Trek posts On Twitter: Breaking news updates | Weird and wild

MORE FROM MIDEAST & N. AFRICA

Mideast & N. Africa Section Front

Carter defends handling of Iran hostage crisis   U.N.: Iran nuclear facility to start in 2011 Saudi cleric accuses Iran of ties to Yemeni rebels Bingo’s comeback erases divisions in Baghdad Mideast & N. Africa Section Front   Add Mideast & N. Africa headlines to your news reader: