Israel will free more than 1,000 Palestinian prisoners, the government announced Monday, just hours before the arrival of Secretary of State James Baker for talks on Middle East peace. The statement by the Defense Ministry also pledged tax concessions for new businesses in the occupied Gaza Strip.

On a visit a month ago, Baker urged that "confidence building" steps be taken by Israel to coax Arab states and the Palestinians into peace talks. Israeli media reported Monday that Israel would reopen Arab colleges and free hundreds of Palestinian detainees as a goodwill gesture to Baker.Baker is to meet Tuesday with Prime Minister Yitzhak Shamir, Foreign Minister David Levy, Defense Minister Moshe Arens and about a dozen Palestinian leaders. Afterward, Baker heads to Egypt.