In apparent compromise, ministers approve transfer of frozen funds to Norway to hold for Palestinian Authority

Sam Sokol is the Times of Israel's political correspondent. He was previously a reporter for the Jerusalem Post, Jewish Telegraphic Agency and Haaretz. He is the author of "Putin’s Hybrid War and the Jews"

File - Prime Minister Benjamin Netanyahu (right) speaks with Finance Minister Bezalel Smotrich during a cabinet meeting at the Prime Minister's Office in Jerusalem on June 18, 2023. (Amit Shabi/Pool)
File - Prime Minister Benjamin Netanyahu (right) speaks with Finance Minister Bezalel Smotrich during a cabinet meeting at the Prime Minister's Office in Jerusalem on June 18, 2023. (Amit Shabi/Pool)

The cabinet approves a plan to transfer frozen funds earmarked for the Palestinian Authority to Norway, which would only transfer them to Ramallah with the express permission of Jerusalem, following fierce internal debate and extended American pressure.

The government’s decision follows last Thursday’s cabinet discussion of a proposal to transfer the tax revenues — which are collected by Israel on the PA’s behalf, via a third party, which did not end with a vote.

“The United States and Norway respect the decision of the political and security cabinet that ordered a halt to the transfer of Gaza funds to the Palestinian Authority. Therefore, the frozen funds will not be transferred to the Palestinian Authority, but will remain in the hands of a third country,” the Prime Minister’s Office says in a statement.

“The money or its consideration will not be transferred under any circumstances, except with the approval of Israel’s finance minister, not even through a third party. Any violation of the agreement allows the finance minister to immediately freeze” all of the Palestinian tax funds, it continues, adding that Washington had agreed to serve as a guarantor of the plan’s implementation.

Last November, the cabinet approved a partial transfer of funds to the Palestinian Authority while retaining nearly half the initial amount — corresponding to the sum the PA uses to pay its employees in the Gaza Strip — with Finance Minister Bezalel Smotrich steadfastly refusing to transfer the funds, claiming the cash could be transferred to Hamas.

The PA has refused to accept any of the funds, which total around NIS 275 million per month, as long as the money for services and employees in Gaza is not included. Despite prolonged US pressure for Israel to release the monies, Smotrich has remained adamant in his position.

According to the approved outline, Norway will not be allowed to release any of the frozen funds — which would have been used by the Palestinian Authority to pay salaries of government workers in Gaza —without prior Israeli permission, with Jerusalem within its rights to halt the flow of money should Oslo take any such action.

Responding to the decision, National Security Minister Itamar Ben Gvir tweets that Prime Minister Benjamin Netanyahu “constantly moves the red line. Sometimes they give fuel, sometimes they give up humanitarian aid in exchange for humanitarian aid, last week they started moving flour trucks and now they are making a decision that does not guarantee that the money will not reach the Nazis from Gaza.”

Visiting Israel last week, US Secretary of State Antony Blinken urged Israel to transfer the funds: “Those are their revenues,” he said at a January 9 press conference. The PA “should have them.”

Blinken said the PA needed the money to pay its employees, some of whom do essential work in the West Bank. He cited the PA security forces, who he said were trying to keep peace, security and stability in the West Bank — and that’s “profoundly in Israel’s interests.”

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