Two Months After UN Vote

Israel Approves Transfer of Tax Revenues to the Palestinian Authority

Source says PM to transfer NIS 400 million that was withheld in response to Palestinian status upgrade at UN in November; move comes in light of Palestinians' dire financial straits.

Israel has renewed the transfer of Palestinian tax funds it collects to the Palestinian Authority. The transfer of all such funds was frozen at the end of November 2012, after the Palestinians petitioned the United Nations General Assembly to upgrade their status to that of nonmember observer state.

Under the Oslo Accords, Israel collects customs duties for the Palestinian Authority and then transfers the funds.

A source in the Prime Minister's Office said on Tuesday that Prime Minister Benjamin Netanyahu decided to transfer tax revenues from December. But this is only a one-time step, said the source, in light of the PA's dire financial straits - and the matter will be reexamined at the end of next month.

On Wednesday, professional staff from Israel's Finance Ministry will meet with their Palestinian counterparts to compare accounts and agree on the amounts Israel collected on behalf of the Palestinians in January, in order to transfer that amount. The total is estimated at around NIS 400 million.

The frozen funds that have accumulated since the response to the Palestinian move in the UN total almost NIS 800 million. This money has been used to offset the PA's debts to the Israel Electric Corporation and other Israeli bodies.

The PA has been in a critical financial position for months, and has found it difficult to pay the wages of its government employees and security forces. This was caused both by the halt in the transfer of tax funds from Israel and by a reduction in the funds the PA receives from Western and Arab nations for support.

In recent weeks, Israel was under heavy international pressure to renew the fund transfers. At the same time, in internal discussions, the Israeli security establishment recommended renewing the transfers to prevent the collapse of the Palestinian Authority and prevent damage to the Palestinian security forces.