JERUSALEM, Nov. 16 (AP) - After rocketing Palestinian command centers, Israel announced Thursday it is freezing millions of dollars in tax transfers to the Palestinian Authority in an attempt to pressure Yasser Arafat to abide by truce agreements.

An envoy for President Clinton met separately with Arafat and Israeli Prime Minister Ehud Barak, but failed to nudge them toward resuming peace talks. Instead, more angry words of blame over the past seven weeks of violence flew between the two sides.

Two Palestinians were killed Thursday by Israeli fire in separate incidents near the West Bank town of Hebron.

In a rock-throwing clash in the West Bank refugee camp of Al Fawar, an 18-year-old Palestinian was shot and wounded in the chest. The victim's relatives said he bled to death when an ambulance was turned away at Israeli checkpoints. The Israeli army said that because of an Israeli blockade of Palestinian towns, the patient was to be transferred to an Israeli ambulance, but there was confusion about the meeting point.

Later Thursday, a 30-year-old Palestinian man was killed at an Israeli checkpoint near the town of Beit Ummar. Palestinians said soldiers shot the man without provocation. The army said the man was killed when he tried to seize a soldier's weapon.

The deaths brought to at least 223 the number of people killed in the latest round of Israeli-Palestinian fighting. The vast majority of the victims have been Palestinians.

On Thursday, thousands of Palestinians joined the funeral procession for a German man, 68-year-old chiropractor Harald Fischer. He was killed in an Israeli rocket and machine-gun fire attack on the West Bank town of Beit Jalla that came in response to Palestinian shooting Wednesday night at the nearby Jerusalem neighborhood of Gilo.

German Foreign Minister Joschka Fischer, who is no relation to the victim, said he was ``shocked and horrified'' by the killing. Israel promised an investigation and said Germany would be allowed to participate in the probe.

Israel enforced its blockade of Palestinian towns for a third day Thursday, barring residents from entering or leaving their communities. On the outskirts of the West Bank town of Hebron, Israeli soldiers stopped a Palestinian food truck. One soldier took the driver's keys and slashed the truck's tires. The army said tire-slashing was against policy.

Barak, meanwhile, defended himself against growing criticism at home that the army was not responding harshly enough to Palestinian shooting attacks on Israelis. Four Israelis, including two civilians, were killed in ambushes this week.

Israeli helicopters rocketed three West Bank offices of Arafat's Fatah movement and an armory Wednesday night in retaliation for shooting attacks on Israelis. Israel believes Fatah's Tanzim militia is responsible for much of the violence.

``If we thought that instead of 200 Palestinian fatalities, 2,000 dead would put an end to the fighting at one fell stroke, then perhaps we would use much more force,'' Barak told Israel radio.

Instead, Barak announced Thursday that Israel was withholding millions of dollars in tax revenues it owes the Palestinian Authority. ``The transfer of funds has been stopped as part of our demand that the other side, too, will abide by agreements,'' Barak said.

On average, Israel had been transferring $60 million a month in collected tax revenues to the Palestinian Authority, including money withheld from the salaries of Palestinian workers in Israel.

In the past six weeks, Israel has passed along only about $7.5 million, said Salam Fijad, a representative of the International Monetary Fund in the Palestinian areas. Fijad said the taxes Israel collects make up about two-thirds of the Palestinian Authority's total revenues.

Arafat said that withholding the funds is ``part of the Israeli war against us.''

The Palestinian leader met with Clinton's envoy, Dennis Ross, for nearly two hours Thursday in Gaza City. Arafat said Clinton, whose term ends in two months, ``is insisting to achieve something (concerning peace talks) before his departure.''

Asked whether there could be a peace agreement before then, Arafat said: ``We hope so.'' However, senior Palestinian officials have said confrontations with Israel would continue, even if talks resume.

Barak, who met with Ross late Wednesday, said he would only return to talks once violence was drastically reduced.

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