Palestinians celebrate their successful bid for UN non-member observer state status in Ramallah on December 2, 2012
Palestinians celebrate their successful bid for UN non-member observer state status in the West Bank city of Ramallah on December 2, 2012. Israel said on Wednesday it had released $100 million of the tariffs and tax monies it collects on behalf of the Palestinian Authority, which were frozen last year as punishment for the UN bid. © Ahmad Gharabli - AFP/File
Palestinians  celebrate their successful bid for UN non-member observer state status in Ramallah on December 2, 2012
AFP
Last updated: January 30, 2013

Israel in transfer of frozen Palestinian funds

Israel said on Wednesday it had released $100 million of the tariffs and tax monies it collects on behalf of the Palestinian Authority, which were frozen last year as punishment for the UN bid.

But an Israeli official said it was a one-off measure to ease the financial crisis faced by the Palestinians and was not a sign that the transfers would be renewed.

"This decision was taken by Prime Minister Benjamin Netanyahu because of the Palestinian Authority's very difficult financial situation," an official at the premier's office told AFP.

"But this transfer is temporary and affects only funds owed for one month," he added, speaking on condition of anonymity.

"The prime minister did not commit to continue these transfers."

Every month, Israel transfers some 460 million shekels ($120 million, 92.7 million euros) before deductions, but halted the transfers in early December.

In announcing the move, Israel's finance ministry said the monies were being kept to offset Palestinian debts to Israel's electricity company which total around 800 million shekels ($209.7 million, 161.4 million euros).

But Wednesday's decision to release some of the money was denounced by the Palestinians as effectively "extortion."

"Israel's announcement that it will transfer 400 million shekels ($107 million/79 million euros) of our money on a one-time basis means they will continue to carry out extortion on this issue," Palestinian negotiator Saeb Erakat told AFP.

"Israel is using our money, which it collects, as a sword hanging over our heads," he said.

"Israel should pay us our money immediately and the international community should condemn this Israeli piracy and stop it immediately," he added.

"The transfer of the funds on a one-time basis means the financial and political siege is continuing and that nothing has changed in Israeli politics and Netanyahu's approach."

Israel in early December announced it would not transfer tax and tariff funds it collects for the Palestinians in response to their successful bid for upgraded UN membership, a move the Jewish state had fiercely opposed.

Every month, Israel transfers the funds collected in customs duties which are levied on goods destined for Palestinian markets that transit through Israeli ports, and which constitute a large percentage of the Palestinian budget.

The transfers are governed by the 1994 Paris Protocols which governs economic agreements between Israel and the Palestinians.

But Israel often freezes the transfer of funds as a punitive measure in response to diplomatic or political developments viewed as harmful.

The measure has deepened an already dire financial crisis faced by the Palestinian Authority, which has frequently been unable to make payroll for its employees over the last year.

In response to Israel's freezing of the funds, the Palestinians have urged Arab nations to activate a promised "safety net" of $100 million a month to make up the shortfall.

But despite pledging to deliver the money, funds have yet to materialise, leaving the PA unable to pay its thousands of government employees, who are still owed half their salaries from November and all their salaries from December.

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