(Adds Abbas, Haniyeh comments) By Adam Entous JERUSALEM, Jan 19 (Reuters) - Israel transferred $100 million in withheld Palestinian tax revenue to President Mahmoud Abbas on Friday, part of a U.S.-led push to bolster the moderate leader in his power struggle with Hamas, Israeli officials said. The transfer was the first by Israel since Hamas, whose charter calls for the Jewish state's destruction, came to power last year. "The money has been transferred," a senior official in Israeli Prime Minister Ehud Olmert's office said. The United States has been pressing Israel to strengthen Abbas in his rivalry with the Islamist Hamas movement which took control of the Palestinian Authority in March and has been building up its own "Executive Force". Israeli officials, speaking on condition of anonymity, have said the money would be earmarked for humanitarian needs and a U.S.-backed programme to strengthen Abbas's presidential guard. It will not be used to make long-overdue salary payments to Palestinian public sector workers, hard hit by a Western and Israeli embargo of the Hamas-led government, they said. Abbas aide Saeb Erekat said the funds would be channelled to humanitarian projects and the private sector, but declined to say if any would go towards boosting Abbas's security. HAMAS CRITICISM Since Hamas defeated Abbas's Fatah movement in parliamentary elections last year, Israel has withheld nearly $500 million in Palestinian tax revenues, money that would normally be used by the Palestinian Authority to pay government workers. The decision not to allocate funds for salaries angered Hamas, which said the money should be distributed by the Palestinian finance ministry. "We reject any Israeli conditions on regaining this money. This money belongs to the Palestinian people," Prime Minister Ismail Haniyeh of Hamas told reporters after Friday prayers. Hamas has struggled to govern since taking office in March under the weight of U.S.-led sanctions imposed because of its refusal to recognise the Jewish state, renounce violence and abide by interim peace deals. Hamas and Fatah have been trying to form a unity government which could lead to a lifting of the Western sanctions, and Abbas has said he will call fresh elections if the talks fail. "Things are very clear, (the issue) is how we can form a national unity government that is able to lift the siege," Abbas said after talks with European Union foreign policy chief Javier Solana in the West Bank town of Ramallah. "We say either we form a government or we hold elections. The elections do not mean that we throw Hamas into the sea, Hamas could be re-elected," he added. Abbas is due to meet Hamas leader Khaled Meshaal in Damascus on Saturday, a Palestinian legislator said. Abbas did not confirm the planned talks, but said he would be meeting Syrian President Bashar al-Assad and "many Palestinian officials". (Additional reporting by Nidal al-Mughrabi in Gaza and Mohammed Assadi in Ramallah)
