Palestinian Authority accepts partial Israeli transfer of tax funds, report says

The Palestinian Authority has agreed to accept tax revenue gathered by Israel, Sky News Arabia has reported.

The decision came a day after Israel’s cabinet approved the transfer of frozen Palestinian tax funds, which will be held by Norway in a trust fund, as fears rise that the occupied West Bank is on the brink of economic collapse.

The sum will not include a share of the funds that is normally sent to Hamas-led Gaza, the report yesterday said.

The Palestinian Authority had originally refused to accept anything less than the full amount owed to it by Israel.

Under interim peace accords, Israel’s Finance Ministry collects import taxes on behalf of the Palestinians and makes monthly transfers to the authority, which has limited autonomy in the occupied West Bank, but there have been constant wrangles over the arrangement.

These transfers account for 64 per cent of the Palestinian Authority’s revenue.

Since the outbreak of the Gaza War in October, the Palestinian Authority, a major employer in the West Bank, has struggled to pay salaries in full. In November, they were not paid at all.

Palestinian Authority sources said they feared that without a release of the funds held by Israel, it will not be able to pay salaries in February.

The Israeli cabinet said it reserved the right to decide when the funds will be transferred from Oslo to the Palestinian Authority.

Far-right Security Minister Itamar Ben-Gvir opposed the move, pitting himself against the US and a growing segment within internal Israeli security circles who believe that economic collapse in the West Bank could endanger Israel.

Mr Ben-Gvir, in response to the decision, accused Prime Minster Benjamin Netanyahu of “constantly moving the red line”.

Mr Netanyahu said the cabinet decision was supported by the US, which will act as a guarantor.

The money will not be transferred “under any circumstances, except with the approval of the Minister of Finance of Israel, not even through a third party”, he wrote on social media.

“Any violation of the agreement allows the Minister of Finance to immediately freeze all of the Palestinians’ settlement funds.”

Alongside Mr Ben-Gvir, Finance Minister Bezalel Smotrich is one of the most extreme figures in the Netanyahu government. The pro-settler politician has frequently pursued a hawkish line on Israeli relations with the Palestinian Authority.

Critics of Mr Smotrich, himself a settler, accuse the minister of being a “pyromaniac” in his approach to the occupied West Bank.

Hussein Al Sheikh, secretary general of the executive committee of the Palestine Liberation Organisation, said in a social media post on Sunday that the Palestinian leadership was “examining all proposals to solve the current financial crisis as a result of Israel’s withholding of our funds”.

“The Palestinian leadership insists on its position of commitment to our people in the Gaza Strip,” Mr Al Sheikh said.

“The leadership appreciates the efforts made by brotherly and friendly countries to end the financial crisis.

“At the same time, the leadership demands an end to this destructive war and this continuing aggression against our people throughout the country.”