Global General

Israel to withhold tax transfer to Palestinians

(Xinhua)
Updated: 2011-05-01 21:20

JERUSALEM - Israeli finance minister said Sunday the treasury had suspended a regular payment of some 300 million shekels ($88 million) in taxes and customs fees to the Palestinian National Authority (PNA) until Israel knows that the money will not end up in the hands of Hamas.

Minister Yuval Steinitz's decision to sanction the PNA came in the wake of last week's agreement by Fatah and Hamas to set up a national unity government prior to elections.

Israel maintains that Hamas is a terror organization sworn to the Jewish state's destruction, and senior officials have said they will not hold talks or negotiate with either group.

Steinitz said the transfer of funds, which amount to more than $1 billion annually - about two-thirds of the PNA budget - would not continue until Israel has proof that the money would not reach Hamas militants, according to Israel's Army Radio.

The Palestinian leadership slammed Israel's decision to halt tax transfers. "This is a clear financial piracy," said Saeb Erekat, a member of Palestine Liberation Organization's Executive Committee and former chief Palestinian negotiator.

The accord with Hamas was an internal Palestinian matter, and " the Israeli decision is financial piracy that reflects Israel's dangerous intentions," Erekat said.

Erekat said the quick Israeli reactions to the bids of forming a Palestinian unity government "were an evidence that the Palestinian split served Israel's high interests."

He explained that the upcoming government would be technocratic and will prepare for elections within a year, warning against any international isolation on the government.

Meanwhile, Palestinian Prime Minister Salam Fayyad said the Israeli decision will not force the Palestinians to stop efforts to unite and reconcile.

Leaders of the two former rival Palestinian groups are expected to sign the accord on Wednesday in Cairo.

Israeli Prime Minister Benjamin Netanyahu on Friday told Australian Foreign Minister Kevin Rudd that the Palestinian deal " was a step in the wrong direction."

"Today, with the proposed unity government, it is not only that they refuse to confront people who call for the destruction of Israel, (but that) they have decided to embrace them," Netanyahu said, according to The Jerusalem Post.

Israeli Defense Minister Ehud Barak said Saturday in talks with the United Nations Secretary-General Ban Ki-Moon that any Palestinian unity government would have to first "recognize Israel, abandon the path of terror and accept all previous agreements" before Israel would agree to talks with them.

Under the Oslo Accords, the Israeli government administers tax and customs duty payments on behalf of the PNA. At the beginning of 2001, during the intifada (uprising), Israel withheld more than $50 million in taxes it owed the Palestinians in order to bring the PNA to quell attacks against Israelis.

When Hamas, which does not recognize Israel, won parliamentary elections in 2006, Israel stopped cash transfers to the PNA, leaving it unable to pay salaries for its employees. Israel resumed the money transfers after Hamas took over Gaza by force and left the PNA's rule confined to the West Bank in June 2007.