Gaza tax funds ‘to be held by Norway’

Israel’s cabinet has approved a plan for frozen tax funds earmarked for the Hamas-run Gaza Strip to be held by Norway instead of being transferred to the Palestinian Authority (PA), officials said on Sunday.

Under interim peace accords reached in the 1990s, Israel’s finance ministry collects tax on behalf of the Palestinians and makes monthly transfers to the Western-backed PA, which exercises limited self-rule in the Israeli-occupied West Bank.

But there have been constant wrangles over the arrangement, including Israel’s demand that the funds do not reach Hamas.

Hamas seized control of Gaza from the PA in 2007 after a brief civil war, and two years after Israel withdrew settlers and military forces. Despite the Hamas takeover, many PA public sector employees in Gaza kept their jobs and continued to be paid with transferred tax revenues.

Israel is now at war in Gaza to wipe out Hamas after a crossborder attack by militants on October 7.

Prime Minister Benjamin Netanyahu said the cabinet decision on the tax funds is supported by Norway and the US, which will be a guarantor that the framework holds.

Netanyahu’s offices said the money, or any equivalent, will not be transferred “in any situation, except with the approval of the Israeli finance minister, and also not through a third party”.

The Palestine Liberation Organisation (PLO) said on Sunday it wanted the money in full and would not accept conditions that prevent it from paying its staff, including in Gaza.

“Any deductions from our financial rights or any conditions imposed by Israel that prevent the PA from paying our people in the Gaza Strip are rejected by us,” Hussein al-Sheikh, secretary-general of the executive committee of the PLO, said on X.

A spokesperson for Israeli finance minister Bezalel Smotrich, who heads a far-right party, confirmed Norway will hold the funds under the arrangement.