NEW YORK - Finance Minister Yuval Steinitz on Tuesday threatened severe
financial ramifications if Palestinian Authority President Mahmoud Abbas
makes good on a plan to request UN membership for a Palestinian state
this week.
Steinitz said the government could stop collecting the
40 percent of the Palestinian Authority's budget through value added,
excise and customs taxes.
RELATED:Romney calls on US to cut foreign aid to Palestinians Israel warns PA its UN bid could impact economic aid "It
is my view, there is no government decision, that if the Palestinians
violated the very fundamentals of the peace agreement, we should
reconsider delivering tax money to them," Steinitz said in an interview
with Reuters.
Taxes that Israel collects on behalf of the Palestinian Authority total
about 500 million Israeli shekels ($135 million) a month, Steinitz said.
Steinitz temporarily stopped the transfer of the tax revenues last spring.
If Abbas makes his unilateral declaration, Steinitz said he hoped the
attempt would fail, and he questioned whether the PA could run a stable
state in which donations and international aid make up 40% of the
budget.
"We are worried because of what we saw in Gaza," he said, referring to
Hamas takeover of the Strip following Israel's withdrawal.
"We are worried because this is a hostile move," he said, adding that
Israel wanted a peace based upon a bilateral agreement not a unilateral
declaration.
The United States contributes $500 million in financial support annually
to the PA. Some US politicians have said they will try to cut American
aid to the Palestinians if they refuse to back down.
PA Monetary Authority Governor Jihad al-Wazir told Reuters on Monday
that if the United States were to withdraw its aid, it could destabilize
the PA.
"Really, the risk of a PA collapse is very real under the financial
strain, without US assistance, without donor assistance in general," he
said.
