US warns of ‘massive’ impact to Israel if Palestinian Authority collapses

The United States warns that Israel will see a “massive” negative impact if the Palestinian Authority collapses, as Washington again presses its ally to let revenue flow.

“We have made clear to the government of Israel in some very direct conversations that there is nothing that could be more counter to the strategic interests of Israel than the collapse of the Palestinian Authority,” State Department spokesman Matthew Miller tells reporters.

While acknowledging shortcomings in the Palestinian Authority, he says the Ramallah-based body had helped maintain stability in the West Bank even as war has raged in Gaza, run for years by rivals Hamas.

“If you saw the Palestinian Authority collapse and instability spread across the West Bank, it’s not just a problem for the Palestinians,” he says, “it is also a massive security threat for the state of Israel.”

Under peace agreements in the 1990s, Israel collects money on behalf of the Palestinian Authority, which exercises limited autonomy in parts of the West Bank.

Israel then disburses the money to the PA.

But Israel blocked revenue for months following the October 7 Hamas terror assault in southern Israel and subsequent war in Gaza, and only recently agreed to transfer the hundreds of millions of shekel in PA tax revenue via Norway to ensure none are diverted to Gaza.

Far-right Finance Minister Bezalel Smotrich has warned since then, however, that he will cut off the transfer of funds if the PA continues with its efforts for international recognition as a state.

The World Bank recently warned that the Palestinian Authority’s fiscal situation has “dramatically worsened” with the risk of complete collapse.