Palestinian Authority weighs options after Israel plays tax card

Israel deducts millions from tax revenues it collects on behalf of the Palestinian Authority to ‘reduce attacks carried out by Palestinians.'

Palestinian Authority President Mahmoud Abbas attends the meeting of the Palestinian Central Council, in Ramallah, in the West Bank August 15, 2018 (photo credit: REUTERS/MOHAMAD TOROKMAN)
Palestinian Authority President Mahmoud Abbas attends the meeting of the Palestinian Central Council, in Ramallah, in the West Bank August 15, 2018
The Palestinian leadership is meeting in the coming days to discuss an “appropriate” response to Israel’s recent decision to deduct some $138 million from the tax revenues it collects on behalf of the Palestinian Authority (PA). The rationale behind the move is to “reduce attacks carried out by Palestinians.”
In July, the Israeli cabinet approved a law that slashes funds to the PA in the amount equivalent to what the Palestinian Liberation Organization (PLO)—the dominant movement within the leadership—pays to Palestinian security prisoners and those who died in clashes, as well as their families. Israel often withholds funds for what it deems as egregious acts against its people or government.
PA spokesperson Nabil Abu Rudeineh strongly condemned the Israeli law, and confirmed the PA finds it totally unacceptable and considers it as “piracy of the Palestinian people’s funds.” 
“We will not accept any harm to the livelihood of our captive heroes and the families of martyrs and the wounded. We consider this an arbitrary Israeli decision that represents a unilateral blow to the signed agreements, including the Paris Protocol [on economic relations],” he said, warning of serious repercussions at all levels.
The Palestinian Finance Ministry has admitted that it had transferred NIS 100 million (roughly $27.5 million) to help families in cases in which the primary breadwinner was incarcerated or killed. According to the new Israeli law, the PA is violating the Oslo Accords by transferring funds to these families.
Ziad Abu Ziad, Fatah’s international media spokesperson, told The Media Line that the Israeli move is illegal and constitutes blackmailing the Palestinian leadership. “Israel is pressuring the leadership to compromise on red-lines and national constants,” he said, adding that there will be a response soon after the leadership meets in a few days.
Much of Israel’s defense establishment is purportedly against withholding the funds. Many within it fear a budgetary shortfall in the PA could lead to diminished security cooperation and ultimately the destabilization of the West Bank. Moreover, military officials reportedly told cabinet ministers that President Abbas could be forced to end the monthly transfer of nearly $100 million to the Hamas-ruled Gaza Strip, potentially leading to further unrest on that front as well.
An American-Palestinian businessman and economic analyst who spoke to The Media Line on condition of anonymity added that Israel’s control of PA funds “means it has huge political power on the ground to change events.”
The analyst clarified that local and international donors will help bolster the Palestinian economy in light of the shortfall.
“Israel is playing with its golden tax card to reduce the Palestinian president’s power in the West Bank and Gaza,” the analyst said. It is a political move intended to put pressure on the PA, more than a move to destroy the Palestinian economy, he explained.
“But at the end of the day, as long as the Palestinian leadership is divided between Fatah and Hamas—the Islamic organization that rules the Gaza Strip—Israel will gain more and more control over the lives of Palestinians. 
“It’s very important to hold elections that would establish a legitimate government that acted according to the Palestinian national agenda, and not according to factional politics,” he concluded.
Azmi Abdul Rahman, the spokesman for the PA’s Economy Ministry, told The Media Line there has been a series of coherent steps by Israel and the American administration to humiliate the Palestinian people. “The U.S. cut millions of dollars in aid to the PA, and now Israel is playing with almost the only financial source we have left.”
The Palestinian economy is under occupation as Israel controls 90% of economic resources in the West Bank, he explained. “This move will negatively impact the Palestinian economy and the government’s public budget.”
Israel’s recent decision to withhold funds is a provocative step that violates agreements signed between the two sides as well as many international protocols. “It was agreed on that the collection of these amounts is independent of politics.”
Thereafter, Abdul Rahman stated that these Israeli policies reflect a bullying attitude toward Palestinians, and one that is above the law.
When asked about alternatives, he confirmed that the new strategy is to approach Arab countries and international players to help the Palestinian economy from one side, while pressuring Israel to commit to the signed agreements and international laws on the other.