Prime Minister Ryutaro Hashimoto on August 25 called on his Israeli counterpart to reopen the West Bank and Gaza Strip to Palestinians, arguing that improving Palestinians' economic status is essential if peace is ever to be established in the Middle East.

Hashimoto told Benjamin Netanyahu that the current ban barring Palestinians from the areas has caused them economic hardships. "It is important to bring economic self-sufficiency and stability to the Palestinians," Hashimoto was quoted as telling Netanyahu during a luncheon in Tokyo. The embargo is said to be preventing about 100,000 Palestinian workers from reaching their jobs, adding a further impediment to the Middle East peace process.

Israel also should stop refusing to pay of tens of millions of dollars in Palestinian tax revenues to the Palestinian Authority, Hashimoto reportedly told Netanyahu. Israel froze the funds as part of sanctions imposed after a double suicide bombing that killed 15 people in an open-air market in Jerusalem earlier this month. Islamic militants have claimed responsibility for the attack.

Netanyahu said he agrees with Hashimoto over the importance of economic development for Palestinians, according to the officials. He said that Israel wants to lift the sanctions as soon as possible but added that the travel restrictions need to be continued for security reasons. Netanyahu has repeatedly said that the sanctions will not be lifted until Palestinian leader Yasser Arafat takes tough action against Islamic militants.

Netanyahu also expressed concern over Iranian purchases of weapons of mass destruction and of ballistic missiles, saying they threaten regional peace, the ministry officials said. Hashimoto and Netanyahu agreed to promote cooperation in the fight against terrorism, the officials said.