Israel Passes Law Freezing Funds to Palestinian Authority Over Payments to Security Prisoners

Abbas says the law 'crosses a red line.' According to ex-Shin Bet security service head, the PA each year transfers 1.2 billion shekels ($333.3 million) to security prisoners and their families

Jamal Zahalka at the Knesset, today.
Olivier Fitoussi

The Knesset passed into law Monday a bill that allows Israel to deduct the payments the Palestinian Authority makes to security prisoners and their families from the taxes Israel collects and passes on to the PA.

The law passed after a stormy debate, in which members of the Joint List clashed with Likud MKs and Israeli Arab lawmaker Jamal Zahalka called former Shin Bet security service head Avi Dichter a terrorist.

"We condemn the law to offset the prisoners' benefits, it crosses a red line" said Nabil Abu Rudeineh, spokesman for PA President Mahmous Abbas, speaking on Tuesday. Abu Rudeineh said the law was "a declaration of war on the Palestinian people and a severe blow to the Oslo Accords," adding that "all options are open for the Palestinian leadership including the International Court of Justiceand the the UN Security Council."

The law stipulates that every year the defense minister will submit to the security cabinet a report summarizing the transfer of funds from the PA to prisoners and their families. This sum will be divided by 12, and the result will be withheld from the subsequent monthly transfers of taxes Israel makes to the PA.

According to Dichter, the PA each year transfers 1.2 billion shekels ($333.3 million) to security prisoners and their families, constituting 7 percent of the PA’s budget.

The original version of the law stated that the funds withheld would be allocated to the war against terrorism, “for the welfare of all the residents of Judea and Samaria,” i.e, the settlers as well, and to pay compensation in lawsuits against the PA or Palestinian terrorist operatives. But the version approved in the end states that the funds will be frozen and transferred to the PA only after the defense establishment determines that it has stopped making payments to security prisoners and their families. The bill was changed after the attorney general warned that using the money that was offset would be problematic under international law.

The final version also omitted a clause the government wanted, which would have allowed the security cabinet discretion on whether to freeze the funds or avoid doing so for diplomatic reasons. As a result, the cabinet will be obligated to freeze the funds.

The new Israeli legislation was met with harsh response from Palestinian officials. Speaking to Voice of Palestine radio, Issa Qaraqe, head of the Prisoners' Commission, said on Tuesday that the funding freeze is "theft and piracy of Palestinian money as well as an arbitrary and racist law." 

Australia has ended direct aid to the Palestinian Authority because it says its donations could increase the self-governing body's capacity to pay Palestinians convicted of politically motivated violence.

Foreign Minister Julie Bishop said Monday that funding to a World Bank's trust fund was cut after she wrote to the Palestinian Authority in late May seeking assurance that Australian funding was not being misspent.

"I am confident that previous Australian funding to the PA through the World Bank has been used as intended. However, I am concerned that in providing funds for this aspect of the PA's operations there is an opportunity for it to use its own budget to (fund) activities that Australia would never support," Bishop said in a statement.

"Any assistance provided by the Palestine Liberation Organization to those convicted of politically motivated violence is an affront to Australian values and undermines the prospect," Bishop added.

DPA contributed to this report.