Israeli Deduction of Palestinian Tax Funds Escalates Financial and Political Tensions

A report by Yazbek Wehbeh, English adaptation by Nadine Sassine

The Palestinian Authority relies on funds from the Israeli government for two-thirds of its general budget. These funds are collected as customs duties on goods entering Palestinian territories through Israeli-controlled border crossings and amounted to about $220 million per month a year ago.

Recently, Israeli courts have issued rulings to deduct portions of these funds as compensation for what they term victims of Palestinian terrorism. However, until now, the authorities in Tel Aviv had not enforced these rulings.

A week ago, Israeli Finance Minister Bezalel Smotrich made a controversial decision to deduct $35 million from Palestinian tax revenues and allocate it to 28 Israeli families who claim their relatives were killed in attacks carried out by Palestinians.

The Palestinian Authority has condemned this move as blatant piracy, noting that the Netanyahu government had already been deducting $50 million monthly to pressure the Palestinian Authority. This forced the Authority to reduce salaries for employees, families of martyrs, the wounded, and prisoners by 30% and cut back on health services.

This step is expected to exacerbate the financial crisis of the Palestinian Authority and could lead to increased unrest among Palestinians in the West Bank, some of whom are not supporters of Hamas. This unrest might spark a new uprising, potentially escalating military actions against Israeli forces and opening a third front following Gaza and southern Lebanon.

Will the United States pressure the Netanyahu government to reverse this decision to avoid its dramatic consequences? It is worth noting that Washington intervened months ago when the Palestinian Authority refused to accept funds reduced by Gaza's share after the start of the Gaza war, resulting in a solution where the deducted funds were placed in the custody of the Norwegian government until the disputes were resolved.