In ‘frustrating’ call, Biden tells Netanyahu Palestinian tax funds issue must be resolved — report

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 reports, 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.

“The feeling was that the president is going out on a limb for Bibi every day and when Bibi needs to give something back and take some political risk he is unwilling to do it,” the 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.

In November, the security cabinet voted to approve a partial transfer of tax funds, minus some $275 million designated by the PA for Gaza, as well as for stipends.

The PA refused to accept this partial transfer, leading to fears that it may collapse financially, potentially creating chaos in the West Bank.

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 a proposal that the Israeli prime minister raised himself 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 says, 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 reports citing a US official and the source with knowledge of the issue.

Biden finally told Netanyahu that the issue must be resolved, and ended with “this conversation is over.”

The second US official had another read of the exchange, and said Netanyahu didn’t reject the Norway idea and that 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.”