In ‘frustrating’ call, Biden said to tell PM to resolve Palestinian tax funds issue
US president reportedly snaps at Netanyahu to deal with his coalition hardliners, and transfer to PA collected taxes that have been withheld since October 7
In a “frustrating” call over the weekend, US President Joe Biden told Prime Minister Benjamin Netanyahu that his government’s decision to withhold Palestinian tax funds following Hamas’s shock onslaught on October 7 must be resolved, Axios reported late Thursday, citing US and Israeli officials and a “source with knowledge of the issue.”
One of the US officials told Axios the call between the two leaders on Saturday was one of the most difficult and “frustrating” so far since October 7 when Hamas launched its murderous attack on southern Israeli communities, killing 1,200 people and taking some 240 hostages of all ages.
The Biden administration has firmly backed Israel in its war on Hamas in Gaza, which it has vowed to destroy, but Washington has been pushing for Israel to scale back the high-intensity fighting in the Palestinian enclave amid the mounting death toll and international pressure for a ceasefire.
“The feeling was that the president is going out on a limb for Bibi [Netanyahu] every day and when Bibi needs to give something back and take some political risk he is unwilling to do it,” the US official said.
Israel collects monthly tax revenues on Ramallah’s behalf on imports and exports, and transfers those funds to the PA, but has increasingly held off on some of the funds over various issues, chiefly Ramallah’s payment of stipends to terror convicts and the families of slain terrorists. It has recently warned it will not allow the PA to transfer funds earmarked for services and salaries in the Gaza Strip, alleging the money could reach Hamas while Israel is at war with the terror group.
On November 3, the security cabinet voted to withhold an additional $275 million in Palestinian tax revenues that Israel collects on the PA’s behalf. The figure makes up roughly 30% of the total revenues owed to Ramallah and amounts to the funds that the PA allocates for Gaza.
The cabinet vote was part of a broader Israeli policy aimed at disconnecting from the Gaza Strip, but it was opposed by the security establishment due to fears it could spark the collapse of the cash-strapped PA, which the IDF leans on to maintain stability in the West Bank.
The PA responded to the cabinet decision by declaring that it would not accept any of the tax revenues if Israel refused to include the Gaza portion, daring Israel to allow its collapse in what could well lead to Israel being responsible for the civil affairs of roughly three million Palestinians in the West Bank.
Despite voting with the rest of the cabinet to approve the major cut, Netanyahu’s aides have sought to advance end-around ways to get the Palestinian tax revenues to the PA, including via a loan through the Norwegian government.
But earlier this month, Finance Minister Bezalel Smotrich warned he would not allow the transfer of Palestinian tax funds to Gaza or to the families of Palestinian terrorists — not “even one shekel” — intimating that he would resign from the government rather than permit such a transfer.
A reported deal brokered a few weeks ago by US National Security Adviser Jake Sullivan would enable the Palestinian Authority to send funds to its employees in Gaza by allowing Israel to check the recipients of the funds.
According to the Axios report, “Biden asked Netanyahu to accept” the proposal he himself raised several weeks ago: “to transfer the withheld tax revenues to Norway for safekeeping until an arrangement can be found that will assuage Israel’s concerns that the funds could reach Hamas.”
The PA has accepted this arrangement, the report said, but Netanyahu reportedly tried to walk it back and told Biden he no longer thought it was a good idea.
“He told Biden he doesn’t trust the Norwegians and said the Palestinian Authority should just accept the partial transfer of the funds,” Axios reported, citing a US official and the source with knowledge of the issue.
After a few minutes of conversation, Biden told Netanyahu that he expected him to resolve the issue, and that he should deal with the hardliners in his coalition on the matter just like he, the president, deals with political pressure from Congress about the war. “The president added that ‘this conversation is over’ and ended the call,” the Axios report quoted the US official and second source saying.
Another US official had another read of the exchange, and said Netanyahu didn’t reject the Norway idea. He said the two leaders were “still working through things on their end.”
“We have made good progress and think this issue of tax revenue transfers is on its way to being resolved,” the official added.
A White House spokesperson told Axios the conversation was “good and productive.”
