The Israeli Security Cabinet held discussions on a proposal presented by Finance Minister Bezalel Smotrich, which includes transferring the Palestinian Authority’s clearance funds to a third party before it reaches Ramallah. While no vote was taken to enact the proposed move, the idea raises new considerations in the ongoing dispute over money transfers.
In November, the Council of Ministers approved a partial transfer of funds to the Palestinian Authority, with approximately half of the initial amount being deducted. Smotrich justified this step at the time by claiming that the funds might reach the Islamic Resistance Movement (Hamas), and the Palestinian Authority was faced with the decision to refuse to receive any funds until the funds allocated for services and employees in the Gaza Strip were included.
The Times of Israel newspaper indicated that despite the great American pressure on Israel to release the Authority’s funds, Smotrich remained steadfast in his position. The latest proposal requires the funds to be transferred to a third party, such as Norway, before arriving in Ramallah, provided that Norway or any other third country does not transfer the funds to the Gaza Strip.
The newspaper added that, according to the agreement, Smotrich “has the authority to freeze all the Authority’s funds in Israel, if it turns out that the money is being transferred to Palestinian Authority employees in Gaza.” The newspaper quoted sources as saying that Smotrich, Prime Minister Benjamin Netanyahu, and Strategic Affairs Minister Ron Dermer supported The proposed solution is widely reported, with National Security Minister Itamar Ben Gvir opposing the proposal.
The administration of US President Joe Biden has expressed its fears that the economic collapse of the Authority will lead to a violent escalation in the West BankAs a result of its inability to pay the salaries of its security forces.
Since the beginning of the war on Gaza on October 7, Smotrich announced his refusal to transfer the entire clearance funds to the Palestinian Authority.
Israel collects taxes on behalf of the Authority against Palestinian imports of imported goods and transfers funds to it monthly at an average of 750-800 million shekels (about 190 million dollars), of which 270 million shekels (about 75 million dollars) is transferred to the Gaza Strip in normal circumstances.
The funds allocated to Gaza are distributed at about 170 million shekels to pay the salaries of Palestinian Authority employees in the Strip, and 100 million shekels to pay the fuel bill for the Gaza power station.
The Palestinian Authority relies heavily on these funds, called clearing, to pay the salaries of public sector employees.
During the last two months, the Authority was unable to pay the salaries of public sector employees except partially, and by borrowing from local banks.
