Israel’s far-right Finance Minister Bezalel Smotrich said Thursday that Israel has ordered about $35 million in tax revenue collected on behalf of the Palestinian Authority to be redirected to the families of Israeli terror victims.
Mr. Smotrich called. decision to divert funds In a post on social media called ‘Justice’, he stated that this amount was in accordance with a court ruling that provided compensation to the families of terrorist victims. “Palestinian authorities encourage and support terrorism by paying money to terrorists, prisoners, and the families of released prisoners,” he wrote.
Earlier this month, two laws allowing victims of terrorism and hostilities to claim Palestinian funds came into effect, making the action Mr. Smotrich took on Thursday possible.
The move further endangers the West Bank-based Palestinian Authority, which is already facing severe economic difficulties, and could spark tensions in a region where fighting has surged since Oct. 19 and the quality of life for Palestinians has deteriorated. can. 7 The war in the Gaza Strip began due to an Israeli attack led by Hamas.
State Department spokesman Matthew Miller called Smotrich’s decision “a very bad decision” and said the Biden administration had made clear to the Israeli government that “these funds belong to the Palestinian people.” Prime Minister Miller told a news conference in Washington that Prime Minister Smotrich’s order “risks destabilizing the West Bank and further harming Israel’s security.”
Under the decades-old agreement, Israel collects customs and import taxes on behalf of the Palestinian Authority. These revenues account for most of the Palestinian budget, especially as international aid declines.
Mr. Smotrich, who has branded the Palestinian Authority an “enemy,” has used his power over the purse strings to withhold funds from authorities to worsen economic conditions in an already financially depressed region.
Before October 7, about 150,000 Palestinians living in the West Bank worked in Israel every day, but after the war began, Israel completely banned their employment, causing unemployment in the West Bank to rise sharply. Some Israeli companies have qualified for exemptions, but the ban has created labor shortages in Israel and worsened economic hardship in Palestine.
Experts have warned that without funds to pay security forces and other government staff, the Palestinian Authority’s economic difficulties could further destabilize the West Bank and Israel.
In May, Prime Minister Smotrich said he would withhold tax revenues from authorities after Ireland, Norway and Spain decided to recognize a Palestinian state and the International Court of Justice announced it would seek an arrest warrant for Israeli Prime Minister Benjamin Netanyahu. Defense Minister Yoav Gallant spoke about the war against Hamas in the Gaza Strip. Mr. Smotrich accused the Palestinians of using “political terrorism” against Israel in the international community.
The finance minister also threatened to withdraw compensation granted by the Bank of Israel for transferring money to financial institutions in the West Bank by the end of June. This is to ensure that Israeli banks are not subject to terrorism-related sanctions. This is expected to cool deposits in Palestinian accounts, including those of Israeli companies that cooperate with the Palestinian Authority, and further destabilize the authorities and the West Bank.
Recently installed Palestinian Authority Prime Minister Mohammad Mustafa warned last month that the dire financial situation was leading to a “very serious moment” in the West Bank.
Mr Mustafa held a meeting with European Union officials on Thursday for the 6th EU-Palestine Investment Platform. He said Israel’s tax withholding was a big challenge and had asked European allies for help on the issue, according to Palestinian news outlets.
Michael Levenson contributed to the report.
