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updated 4/28/2010 1:33:23 PM ET 2010-04-28T17:33:23

Palestinians who violate a ban by their government on working in Israeli settlements will be given time to find other employment before facing punishment, a senior official said Wednesday, reflecting how hard it will be to enforce the measure in the job-strapped West Bank.

The law, which also prohibits the sale of Israeli settlement products in the West Bank, was signed this week by Palestinian President Mahmoud Abbas. Violators face up to five years in prison and thousands of dollars in fines.

Palestinians view the more than 120 settlements that Israel has built across the West Bank as a key obstacle to setting up their own state. Supporters of the tough new legislation say it is the least Palestinians can do to stop helping settlements flourish.

Palestinian security forces have confiscated about $5.3 million worth of settlement goods since the Palestinian government announced a crackdown several months ago, Economics Minister Hassan Abu Libdeh said.

However, enforcing a ban on work in Jewish settlements could prove more difficult.

High unemployment in West Bank
About 21,000 Palestinians work in the settlements. Despite a modest economic recovery, nearly a quarter of the West Bank's labor force remains unemployed.

Abu Libdeh said the workers would not face immediate punishment. "We will give (them) a grace period, and then we will implement (the law)," he said. He would not say how much of a grace period is being offered.

Israeli officials denounced the law.

"While Israel is making great efforts to promote and improve the Palestinian economy, this order damages the chances of both economic and political peace," said Silvan Shalom, Israel's minister for regional cooperation.

Israeli Prime Minister Benjamin Netanyahu has promoted the idea of "economic peace," including closer economic cooperation with the Palestinians. He has done more than his predecessors to ease restrictions on Palestinian trade and movement, but Palestinians have dismissed Netanyahu's plan as a poor substitute for real independence.

The Palestinians also took aim at four Israeli cell phone companies they said are operating illegally in the West Bank, without licenses or paying taxes to the Palestinian Authority.

Authorities are confiscating prepaid phone cards of these companies, Palestinian Communications Minister Mashour Abu Daka said.

The Israeli companies did not return calls seeking comment.

Cracking down on Hamas rivals
Palestinian authorities are also cracking down on their Hamas rivals. In the West Bank city of Hebron, Palestinian police arrested a local businessman suspected of trying to smuggle $2.7 million worth of Viagra pills and other sex-boosting drugs hidden in tennis balls.

West Bank police spokesman Adnan Damiri said the businessman faces charges of tax evasion, selling unlicensed drugs and laundering money for the Islamic militant group Hamas.

Damiri said Hamas has been using West Bank importers in a money-laundering scheme by paying for their merchandise, usually from China. The Palestinian security forces have been cracking down on Hamas activities in the West Bank since 2007, when the Islamic militants seized the Gaza Strip in a violent takeover.

In Gaza, meanwhile, medical officials said a 20-year-old Palestinian died at a hospital after being shot by Israeli soldiers during a protest near a border crossing with Israel.

The Israeli military said Palestinians were rioting violently and threatening to damage the security fence at the border. The military said troops fired warning shots to disperse the rioters and was investigating reports of a casualty.

Palestinian militants often use the area to carry out attacks against Israel.

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Associated Press writers Grant Slater and Dalia Nammari contributed to this report.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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