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According to the official, Haniyeh acted in accordance with Egyptian law and declared the money in his possession.

Israel said it was disturbed by Hamas' practice of smuggling money into the occupied territories, adding it had raised this issue with the Egyptian leadership.

On the other hand, a European Union official at the Rafah Crossing told Israel Radio that when Haniyeh arrived at the crossing Thursday, Egyptian officials affirmed he was not carrying any foreign currency.

Palestinian sources confirmed that senior Hamas official Nizar Rayan also entered the Gaza Strip with $6 million, according to Israel Radio.

But Rayan denied bringing any funds.

Egyptian President Hosni Mubarak met last week with the Israeli Prime Minister Ehud Olmert in the Red Sea resort of Sharm el-Sheikh in talks during which he told the Israeli premier that the Egyptian law does not allow the confiscation of foreign funds, as long as they are properly declared.

Last month authorities stopped the Palestinian Prime Minister for seven hours at Rafah preventing him from entering Gaza, after they knew he was carrying large sums of money donated to Hamas and collected by Iran and other Muslim countries.

Haniyeh managed to enter Gaza only after he agreed to surrender the cash to aides in Egypt.

Israel has adopted strict measures aimed at ensuring no money is being trasnfered to Hamas.

Those measures were planned by representatives of Israel, the Palestinian Authority, the United States and the EU.

It’s been reported that representatives of the four parties met in Jerusalem a day before the Palestine Prime Minister’s arrival from Saudi Arabia to finalize security arrangements concluded during Prime Minister Ehud Olmert's meeting with the Palestinian President Mahmoud Abbas last month.

Also discussed was the officials’ task at the Rafah crossing in anticipation of Haniyeh's arrival with funds from Saudi Arabia.

In accordance with the discussed arrangements, the Saudi Arabian plane carrying Haniyeh landed in El-Arish airport in Egypt before American and Egyptian officials began security inspection, which took place in the presence of Nizami Muhane, the PA official responsible for the border crossings.

But Egypt told the EU monitors at Rafah crossing that the Palestinian PM and his envoy weren’t carrying any weapons or money.

Abbas insists on early elections

Speaking to senior officials from his Fatah party, the Palestinian President Mahmoud Abbas reiterated plans to call for early elections, which received strong rejection from the ruling Party Hamas when first announced last month, sparking bloody fighting between members and supporters of both factions that led to the death and injury of many civilians.

"I will not go back on holding early parliamentary and presidential elections," Eissa Karaqaa, a senior Fatah official in Bethlehem, quoted Abbas as saying during a Fatah meeting on Sunday.

"This plan is not a tactic. All paths to forming a government of national unity are closed and there is no other choice except these elections," Abbas said, adding that Fatah should "prepare" for the polls.

The Palestinian leader made his first call for early elections, an apparent attempt to oust the Hamas-led government, on December 16.

Abbas bans Hamas police force

Yesterday Abbas fueled the already heated tension in the Palestinian territories, demanding Hamas to disband its interior ministry's "executive force," arguing it was illegal and should be integrated into existing security structures.

"The executive force (controlled by Hamas) is illegal... and will be treated as such if it is not immediately integrated... into legal security services as stipulated by basic law," said a statement from the presidency.

Hamas rejected the Palestinian President’s request, announcing plans to more than double the size of its 5,500-strong armed force.

"It's not true that the executive force is outside of the security services," Prime Minister Ismail Haniyeh said in Gaza. "It works legally according to the orders of the interior ministry."

"There are certain people who don't want the Palestinian people to live in peace and stability. And they don't want the situation to calm down in order to create a serious and deep dialogue to reach a unity government." AJP and Agencies

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