Axios quoted American officials as saying that President Joe Biden’s administration is concerned about the possibility of the collapse of the Palestinian Authority if Israel does not transfer tax revenues to it.
American and Israeli officials indicated – according to the site – that US Secretary of State Anthony Blinken pressured Israeli Prime Minister Benjamin Netanyahu to release Palestinian tax revenues.
The sources added that Blinken informed Netanyahu that the issue of tax revenues is important to Washington and must be resolved.
In this context, the US State Department described Israeli Finance Minister Bezalel Smotrich’s seizure of Palestinian Authority funds as “extremely wrong.”
The US State Department said, “We clearly told the Israeli government that it must release the Palestinian Authority’s funds immediately,” stressing that withholding the Authority’s funds hinders its ability to maintain stability in the West Bank, “and this harms Israel.”
Fears of the collapse of power
The economic collapse of the Palestinian Authority could lead to escalation in the West Bank, as well as war in Gaza and escalating tensions between Israel and Hezbollah in Lebanon.
Tax revenues – which Israel collects for the Palestinian Authority under an agreement between the two parties – constitute a major source of income for the Palestinian Authority, which is already suffering from a deep financial crisis.
This issue was the focus of a very difficult phone call between President Biden and Netanyahu last December.
Biden asked Netanyahu to resolve the issue, and when the Israeli prime minister responded “in a non-committal manner,” Biden said: “This conversation is over” and hung up the phone.
It took more than two months before Israel, Norway, the Palestinian Authority and the United States reached an agreement to resume the transfer of tax revenues. But the deal did not last long. In early May, Smotrich again froze Palestinian tax revenues.
He claimed that this was due to the legal campaign undertaken by the Palestinian Authority to persuade the Prosecutor of the International Criminal Court to submit a request to issue arrest warrants against Israeli leaders.
Two weeks later, following Norway’s recognition of the State of Palestine, Smotrich demanded that Norway return a portion of the Palestinian tax revenues it had held as part of the agreement.
American officials said that the White House was angry about Smotrich’s move not only because it further destabilized the Palestinian Authority and the security situation in the West Bank, but also because it violated an agreement that the United States had negotiated and was a party to.
Two days ago, Smotrich ordered the deduction of 35 million US dollars from the Palestinian Authority’s tax funds (clearance), and transferring them to Israeli families who claim that their members were killed in attacks carried out by Palestinians.
Smotrich said, “The Palestinian Authority encourages terrorism and pays money to the families of terrorists, prisoners, and freed Palestinian prisoners,” stressing that Israel has deducted the same amounts paid by the Palestinian Authority from its funds, and will transfer them to the families of “victims of terrorism.”
On May 23, the World Bank warned that the public financial situation of the Palestinian Authority had deteriorated sharply in the past three months, which greatly increases the risk of a collapse in public finances.