Haaretz reported the expansion in work permits came after an agreement to remove conciliatory language tying them to the Israeli-Palestinian peace negotiations.
The Jerusalem Post reported the measure, which would bring the total number of Palestinians allowed to work inside the demarcation line for the territories it took over during the 1967 Six Day War to about 40,000, was presented by Defense Minister Moshe Ya'alon with support from both Prime Minister Binyamin Netanyahu and Justice Minister Tzipi Livni, who is heading Israel's negotiation team.
The Post said a Cabinet source said a sentence in the resolution saying the permits, mostly for construction workers, were being granted "within the framework of the negotiations with the Palestinians and as part of a willingness to assist the Palestinian economy" was removed over annoyance that the Palestinians have lobbied Europe to boycott Israeli goods made in the settlements.
"While we take a step that will help the Palestinian economy, they continue to call for a total boycott of settlement goods and industry -- something that hurts them since they are employed in that industry -- and are behind the calls in Europe for stiffer economic sanctions against settlements," the source said.
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