Israel has taken significant steps to ease the Palestinian Authority's financial difficulties, fearing that instability in the West Bank threatens the PA's future, and that the Israel Defense Forces could eventually become the target of demonstrations there.

During a conference of donor countries in New York on Saturday, Israeli representatives presented the package of steps being taken to assist the PA, even though donor nations have not been rushing to meet the Palestinians' requests for aid.

While until a few months ago the whole issue of transferring the tax monies that the Israeli government collects on behalf of the PA was a bone of contention in the Netanyahu government, recently Israel has been making these payments on time, and even paid NIS 380 million as an advance this summer in order to help PA employees receive their salaries.

At the donor conference, Deputy Foreign Minister Danny Ayalon and Coordinator of Government Activity in the Territories Maj. Gen. Eitan Dangot cited several other moves, including Israeli approval of 14 projects proposed by USAID to build and renovate schools and clinics for Palestinians in Area C, which is under full Israeli control.

Israel has also added 5,000 permits for Palestinians to work within the Green Line along with 2,000 overnight permits that allow laborers who work in construction and farming to sleep on site, bringing the number of overnight permits to 9,000.

All told, some 48,000 Palestinians can now work legally within the Green Line, while some 26,000 work in industrial zones in settlement regions, and an estimated 30,000 more are working in Israel without permits. Thus, over 100,000 Palestinians are earning their livelihoods directly from Israel, receiving salaries that are at least double the salaries paid in the West Bank, the Israeli representatives said. They also noted the ongoing progress at removing IDF checkpoints and other steps that ease Palestinian movement.

Israel is also working to obtain financial aid for the PA from European countries, as several Arab countries that had pledged $300 million to the PA have yet to fulfill their pledges.

Earlier this month there were several Palestinian demonstrations in the West Bank against the rising cost of living, particularly the rising prices of food and fuel. Although the demonstrations petered out last week, both the PA and Israel fear that the ongoing economic instability puts the PA at risk.

Nor is the unrest over: Today a strike of public transportation in the West Bank is planned, while on Wednesday a general strike throughout the West Bank is scheduled. Strike organizers include workers organizations affiliated with Fatah, which is trying to direct the public's anger toward PA Prime Minister Salam Fayyad, who is not a Fatah member.

Israel has also provided some relief for the Gaza Strip. Dangot told the donors that Israel will gradually allow the export of furniture and textiles from Gaza to the West Bank for the first time since 2007. Israel has made this promise before, but now it seems ready to fulfill it.

In addition, Israel has permitted building materials into Gaza that Dangot said would suffice for 16 educational, residential and infrastructure projects that are to go up with international financing, including the construction of six schools for UNRWA and road repairs. Israel also permitted the transfer of NIS 100 million from a West Bank bank to Gaza, so that salaries could be paid to those Gaza residents who are still defined as PA employees.

Although neither Israel nor Hamas is admitting it publicly, they seem to have arrived at a status quo that both are being careful to maintain. Israel is gradually reducing its restrictions on the entrance of goods into Gaza and isn't butting heads with the Hamas regime. Hamas, which is trying to also establish solid economic ties with Egypt (something it has yet to achieve ), is being careful not to provoke Israel overtly, although it turns a blind eye to rocket firing and other pinpoint violence by more radical groups.