In a widening crackdown, Israel arrested the founder of Hamas' military wing in the West Bank on Saturday and moderate Palestinian President Mahmoud Abbas moved ahead with a plan to cut off the cash flow to the Islamic militants by regulating their charities, schools and think tanks.

Abbas on Friday ordered all non-governmental groups, including those allied with Hamas, to get new operating licenses, and they now have a week to comply. It was one of his most far-reaching moves against Hamas yet, since the militants took control of Gaza more than a week ago.

However, heads of NGOs warned that Abbas' decree may be difficult to enforce since Hamas' social network provides vital services in an increasingly impoverished society, often stepping in where the cash-strapped government fails to deliver.

In Gaza, meanwhile, the top Hamas leader, deposed Prime Minister Ismail Haniyeh, told Egyptian intelligence chief Omar Suleiman in a telephone conversation that he wanted dialogue with Fatah, Haniyeh's office said.

"Haniyeh affirmed that dialogue is the only way to solve differences," read the statement from his office. It was not the first time that Haniyeh had called for talks with Fatah since the Hamas takeover of Gaza.

Fatah rejected the offer.

"Dialogue is a need for Palestinians but not now," said Mohammed Hourani, a confidant to Abbas. "First Hamas has to apologize to the Palestinian people for the crimes committed in Gaza."

Hamas has not been clear on its policies since it seized Gaza. On Saturday, hardline Hamas leader Mahmoud Zahar was quoted as saying his group might carry out bombings and other attacks in the West Bank in response to an arrest sweep there. Dozens of Hamas activists have been arrested by the Palestinian security forces in the West Bank since the Gaza takeover.

Other Hamas activists have hinted at a bombing campaign to try to destabilize the West Bank, a stronghold of Abbas' Fatah movement. Zahar's comment, to the German news magazine Der Spiegel, marked the first public confirmation of such a plan.

Haniyeh was scheduled to make a speech Sunday outlining Hamas' positions, his office said.

Before dawn Saturday, Israeli troops arrested the founder of the Hamas military wing in the West Bank, Saleh Aruri, prompting allegations by Hamas that the Israeli and Palestinian security forces are coordinating their moves in the crackdown.

Aruri had been released in March after serving 15 years in an Israeli prison. His wife, Hana, said a dozen jeeps surrounded their home in the village of Arura on Saturday, and soldiers ordered her husband to come out. Israeli military officials alleged that Aruri has been involved in violent Hamas activity since his release.

Palestinian officials, meanwhile, were stepping up their campaign to dry up Hamas funding. The interior minister, Abdel Razek Yehiyeh, was assigned to review all NGOs and to deny licenses to those considered in violation of the law. A senior Palestinian official confirmed Saturday that Hamas-allied groups are the target of the review.

Israeli counterterrorism expert Boaz Ganor said he believes about a dozen charities and NGOs are used by Hamas to funnel money. "I see this as one brick in the wall of countering Hamas," he said. "It's a necessary step by Abu Mazen (Abbas) who is trying to strangle Hamas right now."

However, Amjad al-Shawwa, coordinator of the Palestinian NGO Network, said it will be difficult to shut down badly needed charities.

In the West Bank city of Ramallah, 60-year-old Aishe Moussa on Saturday picked up her monthly $50 from a local Islamic welfare office. She said that with one son dead and three in an Israeli prison, she couldn't feed her grandchildren without the assistance. "If they close this place, it means we will face hunger and humiliation," she said.

Nidal Shabana, head of one of the biggest welfare associations in Gaza, al-Mujamma al-Islami, noted his group provides for 5,000 orphans and runs two clinics, 16 kindergartens and two schools. "We are shocked by the decree of the president," he said. "We are associations that provide humanitarian assistance to all people."

Shabana's association had been set up by Hamas' founder, the late Sheik Ahmed Yassin.

In other developments Saturday, Abbas left for Jordan for talks with King Abdullah, ahead of Monday's Mideast peace summit in the Egyptian Red Sea resort of Sharm el-Sheik. The summit will be attended by Abbas, Abdullah, Israeli Prime Minister Ehud Olmert and Egypt's President Hosni Mubarak.

Palestinian negotiator Saeb Erekat said the Palestinians expect an Israeli promise to meet U.S.-set benchmarks for lifting travel and trade restrictions in the West Bank, he said.

"We hope that in Sharm el-Sheik, we will turn a new page," he said. "Now we should restore credibility to the peace process and restore hope that a peace agreement is doable."

Olmert was to seek the approval of his Cabinet on Sunday for some of these steps, including payment of hundreds of millions of dollars in Palestinian tax funds Israel had frozen when Hamas came to power in March 2006.