Israel has responded to Palestine’s successful bid for UN non-member observer state status by halting the transfer of tax and tariff money it collects for the Palestinian Authority (PA).
Finance Minister Yuval Steinitz said on Sunday that the government would use the money it was to transfer to the Palestinians to pay down their debt to the Israel Electric Corporation and other Israeli bodies.
“I have no intention of transferring the taxes due to the Palestinian Authority this month. They will be used to pay the PA debts to the Israeli electricity company and other bodies,” Steinitz said.
The move is the second act of reprisal by Israel in addition to plans to build thousands of settler homes.
This comes in the wake of Palestine Authority President Mahmud Abbas’ return to a hero’s welcome from the UN.
Ahead of the UN vote, Israel’s government had warned the Palestinians and the international community that it would react harshly to upgraded status for the Palestinians, accusing them of leapfrogging negotiations and disregarding peace accords.
The Palestinians say the upgraded status does not contradict any effort for new talks, pointing out that negotiations have been on hold since late September 2010.
Every month, Israel transfers tens of millions of dollars in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports.
Without the transfer, the PA will not have the money to pay government salaries.
The tax revenue constitutes a large percentage of the Palestinian budget and is governed by the 1994 Paris Protocols with the Palestinians.
Israel has frozen payments to the PA before, usually during times of diplomatic tensions.
The UN victory for the Palestinians was a diplomatic setback for Israel, which was joined by only a handful of countries in voting against upgrading the Palestinians’ observer status at the UN to “non-member state”, like the Vatican, from “entity”.