Israel’s far-right Finance Minister Bezalel Smotrich said Thursday he had ordered that some $35 million in taxes Israel collected on behalf of the Palestinian Authority be transferred to the families of victims of Israeli terrorism.
Mr. Smotrich Decided to embezzle funds In a post on social media, he said the Palestinian Authority “supports and encourages terrorism” and said the compensation amount was based on court decisions to families of terror victims. “The Palestinian Authority encourages and supports terrorism by paying compensation to families of terrorists, prisoners and released prisoners,” he wrote.
Earlier this month, two laws came into force allowing victims of terrorism and hostilities to claim Palestinian funds, enabling Mr. Smotrich to take Thursday’s action.
The move further endangers the already beleaguered Palestinian Authority in the West Bank, which is facing severe economic difficulties, and threatens to escalate tensions in the region, where conflict has increased dramatically and the quality of life of Palestinians has deteriorated since the Gaza war was sparked by a Hamas-led attack on Israel on Oct. 7.
State Department spokesman Matthew Miller called Smotrich’s decision “deeply wrong” and said the Biden administration had made it clear to the Israeli government that “these funds belong to the Palestinian people.” Miller told a news conference in Washington that Smotrich’s order “has the potential to destabilize the West Bank and further undermine Israel’s own security.”
Under a decades-old agreement, Israel collects customs and import taxes on behalf of the Palestinian Authority. Those revenues make up the bulk of the Palestinian budget, especially as international aid dwindles.
Smotrich has labeled the Palestinian Authority an “enemy” and withheld Palestinian Authority funds, using his control over Palestinian Authority finances to exacerbate economic conditions in an already 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 banned them from hiring them, causing unemployment in the West Bank to rise sharply. Qualify for exemptionBut the ban has led to a labor shortage in Israel and exacerbated the economic difficulties of the Palestinians.
Experts warn No funds The Palestinian Authority’s economic woes could lead to greater instability in the West Bank and Israel.
In May, after Ireland, Norway and Spain decided to recognize the State of Palestine and the International Court of Justice said it would issue arrest warrants for Israeli Prime Minister Benjamin Netanyahu and Defense Minister Yoav Galant over the war with Hamas in Gaza, Smotrich said he would stop providing tax revenue to the institution. Smotrich accused the Palestinians of practicing “political terrorism” against Israel in the international community.
The finance minister also threatened that by the end of June he would cancel compensation for Israeli banks that transfer funds to West Bank financial institutions, a protection designed to ensure that Israeli banks are not sanctioned for links to terrorism. The move is expected to freeze funds deposited into Palestinian accounts, including funds of Israeli companies working with the PA, and could further destabilize the PA and the West Bank.
Mohammed Mustafa, recently appointed Prime Minister of the Palestinian AuthorityIt warned last month that the dire financial situation had led to a “very serious moment” in the West Bank.
Mustafa met with EU officials on Thursday to discuss the sixth EU-Palestine Investment Platform. He said: Withholding of taxes Israel has challenged the Palestinian move significantly and has turned to its European allies for help, according to Palestinian news media.
Michael Levenson Contributed reporting.
