Hillary Clinton - 16.11.11 - Reuters
U.S. Secretary of State Hillary Clinton. Photo by Reuters
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U.S. Secretary of State Hillary Clinton phoned Prime Minister Benjamin Netanyahu Monday night and demanded that he release Palestinian tax revenue that Israel has frozen for more than a month after UNESCO accepted the Palestinians as a member.

A senior U.S. official and an Israeli source familiar with details of the conversation say Clinton called Netanyahu after messages relayed to him in recent weeks on the tax money were not answered positively.

The Prime Minister's Office confirmed that Clinton called but said the subject was new sanctions that the United States would impose on Iran.

Israel holds $100 million in Palestinian Authority tax revenue collected in October as part of economic agreements between the two sides. Should the freeze continue through the end of November, the sum will reach $200 million.

According to the Israeli source, Netanyahu rejected Clinton's request, saying he lacks a majority in the cabinet on the issue.

Netanyahu added that no decision will be reached on the matter until after a meeting on Thursday between Palestinian President Mahmoud Abbas and Damascus-based Hamas leader Khaled Mashal. The two Palestinians are scheduled to talk about the possible formation of a national unity government.

Clinton's phone call to Netanyahu also comes against the backdrop of urgent requests by Palestinian Prime Minister Salam Fayyad to the U.S. government. Fayyad says that without the tax money he cannot pay the wages of PA officials, including security workers.

Also on Monday night, United Nations Secretary-General Ban Ki-moon called Netanyahu and demanded that the tax revenue be released to the Palestinians immediately. Ban Ki-Moon noted that Israel is required to transfer the money to the Palestinians under the terms of the agreements between the two sides and added that tensions need to be eased so that peace negotiations can be resumed.

Upset by reports that the PA plans to spend funds to provide housing for prisoners released by Israel as part of the exchange to free former IDF soldier Gilad Shalit, two U.S. congressmen, Steve Israel (D – NY) and Ted Deutch (D – FL), are demanding an inquiry into Palestinian Authority funding allocation.

“The United States does not provide economic support funds to the Palestinian Authority to build new homes for terrorists or fund President Abbas' anti-Israel campaign trips through Europe," said Deutch.

"The American people do not want their taxpayer dollars funding any activity that runs counter to the security of our nation or our ally Israel. We have a responsibility to ensure the Palestinian Authority is abiding by U.S. law with total transparency," Deutch said.

Also, at the end of last week, the U.S. national security adviser, Tom Donilon, phoned his Israeli counterpart Yaakov Amidror. They spoke mainly about the coordination of sanction efforts against Iran, after the International Atomic Energy Agency said this month that the data suggested that Iran was working to be able to build a nuclear weapon.

But Donilon also told Amidror that the United States expected Israel to transfer the tax revenue to the PA immediately.

On Monday morning, Netanyahu met with Deputy Secretary of State William Burns, who also demanded that Israel unfreeze the Palestinian tax money. The night before the meeting, Netanyahu held a third discussion on the subject, this time with the forum of eight senior ministers. The ministers decided to continue with the freeze.

Around 11 P.M. Monday night, the Prime Minister's Office released its laconic statement on the Netanyahu-Clinton discussion, saying the topic was Iran.