Finance Minister Steinitz and PA PM Fayyad 370.
(photo credit: (Moshe Milner/GPO)
Israel will stop collecting tax revenues for the
Palestinian Authority and not hand over any money if President Mahmoud Abbas
continues to seek observer state membership of the United Nations, Israel's
finance minister said on Saturday.
"If the Palestinians continue to
advance their unilateral move they should not expect bilateral cooperation. We
will not collect their taxes for them and we will not transfer their tax
revenues," Finance Minister Yuval Steinitz said.
On Wednesday, the
Western-backed Palestinian Authority circulated a draft resolution to UN
member states that calls for upgrading its UN status to that of observer
state, despite objections by the United States and Israel.
"It cannot be
that they hit us unilaterally and then expect bilateral cooperation with us on
economic matters," Steinitz told a town hall meeting in the southern Israeli city of
Interim peace deals task Israel with collecting taxes and
customs duties on the Palestinian Authority's behalf amounting to around $100
million a month, on goods imported into the Palestinian
Israel has previously frozen payments to the Palestinian
government during times of heightened security and diplomatic tensions,
provoking strong international criticism.
The Palestinians are currently
considered an observer "entity" at the United Nations. Upgrading them to a
non-member state, similar to the Vatican's UN status, would implicitly recognize Palestinian statehood.
It could also grant them access to
bodies such as the International Criminal Court in The Hague, where they could
file complaints against Israel.
The status upgrade seems certain to win
approval in any vote in the General Assembly, which is composed mostly of
post-colonial states historically sympathetic to the
Palestinian diplomats also are courting European countries
to further burnish their case.Debt Crisis
Israel and the United States
oppose the move, saying Palestinian statehood must be achieved by negotiation.
They have called on Abbas to return to peace talks that collapsed in 2010 over
Israeli settlement construction in the occupied West Bank.
Palestinians seek to establish a state in the West Bank and the
Gaza Strip - which is controlled by the Islamist Hamas group who are bitter
rivals of the Palestinian Authority - and want east Jerusalem as its
In July, Israel and the Palestinian Authority agreed on a revamp
of revenue collection to try to help relieve the Palestinian government's
deepening debt crisis.
The aid-dependent Palestinian economy in the West
Bank faces financial crisis due to a drop in aid from Western backers and
wealthy Gulf states, as well as restrictions on trade.