Part of the reason why Israel agreed to Oslo was they could off-load much of the cost of the occupation i.e. Israel could offload to the PA the tedious job of running the schools, hospitals, etc., while the infrastructure costs could be offloaded to the EU. Remove the PA and all those billions in donations from the EU would stop - but those schools, and hospitals, etc., still need to be maintained, and still need to be managed. Israel would have to do it, and Israel would have to pay for it.
Israeli official: Der Spiegel report is an attack on Merkel's ties with Netanyahu (Haaretz)