Ministers approve letting Norway hold tax money earmarked for Palestinian Authority
In apparent compromise following prolonged division on matter, cabinet okays arrangement that will see Oslo transfer funds to PA only with Jerusalem’s approval; Ben Gvir slams move
The cabinet approved a plan on Sunday to transfer to Norway Palestinian tax funds which are designated by the Palestinian Authority (PA) for transfer to its staff in Gaza, but which Israel has until now refused to release out of concern that they could reach the Hamas terror organization.
The Palestinian Authority has refused to accept a partial transfer of the tax funds Israel collects on its behalf since November, when the government decided to deduct the amount that the PA has earmarked to send to Gaza to pay for services and salaries in the coastal enclave.
Sunday’s decision, made against the background of heavy American pressure to transfer funds owed to the PA, is designed to try to break this impasse so that Israel technically does not hold funds designated for Gaza, and so that the money is instead held in escrow until Hamas no longer controls Gaza.
It was unclear whether the PA would agree to this arrangement.
Under the terms of Sunday’s cabinet decision, the funds designated for Gaza out of the taxes collected by Israel will be transferred every month into a trust account under Norway’s auspices. Oslo will be barred from transferring the funds to the PA or to any other party without the express permission of Finance Minister Bezalel Smotrich.
Norway will also be unable to use the funds as the basis for a loan or loan guarantees.
Should Oslo breach the terms of the agreement, Israel will end the monthly transfers to the trust account, all of the money transferred into the account until then will be returned to Israel, and Jerusalem will immediately cease its transfers of all tax funds to the Palestinian Authority, according to the decision.
Asked what would happen if the Palestinian Authority does not agree to this arrangement, a senior government source said the US was sympathetic to Israel’s position.
The government’s decision — opposed by far-right minister Itamar Ben Gvir, who claimed that it failed to provide assurances that the money would not reach the Hamas terror group in Gaza — followed 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. Thursday’s meeting 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 said in a statement.
“Neither the money nor anything in its place will 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, the statement continued, adding that Washington had agreed to serve as a guarantor of the plan’s implementation.
The development came as war continued to rage between Israel and Hamas in the Gaza Strip, sparked when the Palestinian terror group carried out a devastating attack on October 7 that killed over 1,200 people, mostly civilians, in southern Israel. The 3,000 terrorists who invaded Israel from Gaza also abducted 253 people of all ages, about half of whom remain captive in the Palestinian coastal enclave
Israel responded with an air, sea, and ground military campaign to destroy Hamas, remove it from power in Gaza, and free the hostages.
In November, the cabinet approved a partial transfer of funds to the Palestinian Authority while retaining the sum the PA uses to pay its employees and for certain services in the Gaza Strip — with Finance Minister Bezalel Smotrich steadfastly refusing to transfer those funds, claiming they could be transferred to Hamas.
The PA then refused to accept any of the funds, which total around NIS 275 million ($75.5 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.
Responding to the decision, National Security Minister Itamar Ben Gvir tweeted Sunday 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.”
Ben Gvir has frequently criticized the government he is a part of over the last few months, but has said he is not considering bolting the coalition and his public posts are seen by many as primarily aimed at distancing himself from certain cabinet decisions in the eyes of his supporters.
Visiting Israel earlier this month, US Secretary of State Antony Blinken urged Israel to transfer the funds. “Those are their revenues,” he said at a January 9 press conference, adding that 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.”
For months, the security establishment, including Defense Minister Yoav Gallant, has urged Netanyahu to reverse a cabinet decision made after October 7 to withhold the tax revenues as well as to prevent the return of some 150,000 Palestinians who were working inside Israel and the settlements.
The former decision was made as part of an effort by Israel to disconnect from Gaza because some of the tax revenues are used to pay services and employees in the Strip. The latter decision was taken as a security precaution following the October 7 massacres.
The security establishment has warned that the policies risk causing the collapse of an already cash-strapped PA, which would leave Israel responsible for providing services to millions of Palestinians in the West Bank. Those warnings have increased over the past week, with security chiefs also warning of a potential surge in terrorism.
Netanyahu did not budge on the matter amid pushback from far-right ministers Ben Gvir and Smotrich, whose support he needs to maintain his coalition.
