Israel proposed using PA funds to cover cost of Gaza rubble clearance — official

Israel has proposed using a portion of the several billions of dollars in clearance revenues it is withholding from the Palestinian Authority to pay for the clearing of rubble for construction projects in Gaza, a PA official told The Times of Israel on Thursday.

Another idea proposed by Israel was using the clearance revenues to cover the cost of the controversial Gaza Humanitarian Foundation’s operations during the war, according to the PA official.

Ramallah opposes both ideas, arguing that Israel has no right to use its “stolen” funds for rebuilding what the Israel Defense Forces destroyed in the Gaza Strip during the war, the PA official asserted.

He expressed further opposition to PA funds offsetting “war crimes” — a reference to repeated shootings of aid seekers approaching GHF sites during the war. The American humanitarian organization has denied involvement in the shootings, and the IDF insisted that it only opened fire at those who posed a threat to troops.

It was not clear, though, how much leverage the PA has on how its funds are used, given that Israel is the party in control of the over $4 billion in clearance revenues that it collects on Ramallah’s behalf.

Jerusalem is supposed to transfer those funds each month to the PA as part of the Oslo Accords, but Finance Minister Bezalel Smotrich has refused to do so since May 2025. At the time, he said it was in protest of the PA-backed unilateral recognitions of a Palestinian state.

Since the beginning of the Gaza war, Israel has also been withholding the portion of the funds that the PA uses to pay employees and services in the Strip, arguing that the money is at risk of seizure by Hamas.

In addition, Israel withholds funds that it says make up the stipends that the PA pays to the families of Palestinian security prisoners and slain attackers — a policy that Ramallah insists it halted last year.

The Prime Minister’s Office did not respond to a request for comment.

The clearance revenues are mainly import VAT, customs duties, purchase taxes, and fuel excise on goods destined for the West Bank. They make up a majority of the PA’s budget, so Israel’s withholding of those funds has sparked a severe financial crisis for Ramallah.

The US administration has pressed Israel to release the funds, including during Prime Minister Benjamin Netanyahu’s meeting last month with President Donald Trump in Florida. Despite the US pressure, the premier has refrained from bringing the matter before the cabinet and in November shelved plans to prevent Smotrich from trying to collapse the Palestinian Authority after the far-right minister threatened to resign and bring down the government.