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Israel Backtracks, Transfers Tax Money to Palestinian Authority

Israel froze the transfers last month after Fatah and Hamas agreed to form a Palestinian unity government, out of fear that some of the money might end up in Hamas' hands.

Israel yesterday retracted its decision to freeze fund transfers to the Palestinian Authority and agreed to hand over the NIS 300 million it froze last month.

Finance Minister Yuval Steinitz ordered ministry officials to coordinate the transfer with their Palestinian counterparts forthwith.

Palestinians Rafah border - AP

The money consists of customs duties that Israel collects at its ports on behalf of the Palestinian Authority. Israel froze the transfers last month after Fatah and Hamas agreed to form a Palestinian unity government, out of fear that some of the money might end up in Hamas' hands. But because the money is in fact Palestinian, not Israeli, Jerusalem has been under massive international pressure to resume the payments ever since.

The Finance Ministry said it agreed to release the funds after receiving assurances that the money would not reach any terrorist organizations. Nevertheless, it added, it will continue to monitor the transfers, and if it turns out that the money is indeed being used to harm Israel, "we will do everything possible to protect our interests."

In an interview published in Haaretz last Friday, PA Prime Minister Salam Fayyad complained that the frozen money had prevented him from paying April salaries to PA employees. "This is not Israel's money," he said. "These [funds] are taxes paid by Palestinian citizens. Israel has no sovereignty over them. More than that, what made this move necessary? Now, people are telling me 'You say you're ready for statehood but you can't even pay wages.'"

Those who have demanded the money's transfer in recent days include U.S. Secretary of State Hillary Clinton, Quartet envoy Tony Blair and UN Secretary General Ban Ki-moon, all of whom were presumably pleased by the decision.

But not everyone was: Relatives of kidnapped soldier Gilad Shalit, who has been held by Hamas in the Gaza Strip since 2006, were furious. "We regret the fact that Israel's government once again folded quickly and released the Palestinian Authority's money, after the finance minister hastened to announce that it had been frozen just last week," said Gilad's father, Noam Shalit.

The decision to form a Fatah-Hamas unity government will presumably restore PA authority over Gaza, which is currently under Hamas' sole control, Shalit noted. Thus from now on, he argued, the PA can no longer disclaim responsibility for Gilad's continued captivity.

By holding Gilad "as a hostage for the purpose of extortion ... the Palestinian Authority, along with its new-old partners, is undoubtedly committing a blatant war crime under the Rome Treaty," he continued. "Unfortunately, we haven't received any explanation as to how the above accords with releasing these funds to the PA."

The family's attorneys also sent an urgent request to the prime, defense and finance ministers for answers to a long list of questions. In particular, they want to know whether the forum that voted to release the funds ever discussed the issue of the kidnapped soldier in this context, and if so, what considerations led them to release the money without any conditions relating to Gilad.