Ministers vote to transfer tax funds to PA, subtracting money designated for Gaza
Security cabinet says it has ‘cut all contact’ with Gaza, vows to return detained laborers back to Strip; Washington had pushed Israel to release funds after Smotrich freeze
The security cabinet voted late Thursday evening to transfer frozen tax funds to the Palestinian Authority but hold back those monies designated for Gaza, ending a standoff between government ministers.
The move was backed by security chiefs and Washington who viewed the transfer of such funds as necessary to shore up the beleaguered PA’s position in the West Bank as a more moderate force against extremists.
A statement from the Prime Minister’s Office Thursday night said that the security cabinet had voted to “deduct” the funds that were intended for Gaza, as well as those funds that are continuously deducted to offset money the PA pays to imprisoned terror convicts and their families.
“Israel is cutting all contact with Gaza,” the statement read. “There will be no more Palestinian workers from Gaza [in Israel], and the workers who were in Israel at the start of the war will be returned to Gaza.”
Anywhere from hundreds to several thousand Gazan laborers, who held legal work permits for Israel, have been held by the IDF since the start of the war on October 7, with the exact number unknown. It was also not clear how the government intends to return them to Gaza, since all crossings between Israel and the Strip have been shut since the war.
According to Hebrew media outlets, about $100 million is set to be withheld to offset the PA transfers to Gaza, which are intended to pay for electricity and water in Gaza, medical treatment for Gazans in Israel and the West Bank, and salaries for Fatah officials in the Strip.
Earlier this week, US Secretary of State Antony Blinken — who is set to arrive in Israel on Friday — testified before Congress that he believes the Palestinian Authority should eventually take over the Gaza Strip after Hamas is eliminated.
“At some point, what would make the most sense would be for an effective and revitalized Palestinian Authority to have governance and ultimately security responsibility for Gaza,” Blinken told the Senate hearing. He also said that the US had asked Israel to release the Palestinian tax funds.
The decision Thursday came in direct contrast to a call from Finance Minister Bezalel Smotrich earlier this week to freeze the transfer of the customs duties collected by Israel, accusing the PA of supporting Hamas’s October 7 massacre in southern Israel.
But Defense Minister Yoav Gallant had objected to the position, saying it was in Israel’s best interest to transfer the funds immediately, and Prime Minister Benjamin Netanyahu was reported to also favor backing the move.
“It is appropriate to transfer, and transfer immediately, the funds to the Palestinian Authority so that they will be used by its forces who help prevent terrorism,” Gallant said at a press conference on Wednesday.
The monthly transfers in place make up nearly 65% of the Palestinian annual budget. Due to the PA’s lack of statehood status, Israel is responsible for collecting customs duties and other tax revenues on its behalf. Israel has made deductions in the past based on 2018 legislation that allows it to offset the PA’s payment of stipends to terrorists and their families. But it only partially upholds the policy, as officials are keenly aware that the PA is dangerously close to financial collapse.
Smotrich abstained during the security cabinet vote Thursday on transferring the funds, while far-right National Security Minister Itamar Ben Gvir opposed the measure, a day after backing the former’s position.
“We cannot return to this dangerous concept,” Ben Gvir said Wednesday, adding that the PA, “which supported the massacre carried out by Hamas terrorists… does not deserve to receive even one shekel.”
Ben Gvir said the PA “is not an alternative to Hamas, it is an ally of Hamas, and that it is how it should be treated, both now and after the war.”
The PA has avoided condemning the October 7 Hamas onslaught, in which terrorists from Gaza rampaged in southern Israel, brutally murdering 1,400 people, mostly civilians, and kidnapping at least 247 others. Instead, Ramallah has made vague pronouncements about protecting civilians on both sides, while harshly decrying Israel’s military offensive.
Earlier Thursday, Ynet quoted several unnamed senior officials blasting Smotrich, a hardliner who leads the far-right Religious Zionism party.
“We expect the Palestinian security forces to operate against Hamas in the West Bank and to preserve law and order in Palestinian cities. This can’t be done without receiving salaries,” a security official said, warning that an escalation of violence in the West Bank could harm war efforts in Gaza and the north.
An unnamed senior cabinet official was quoted as saying that the “Americans are horrified by what Smotrich is doing,” accusing him of trying to “inflame” West Bank tensions.
Despite acrimonious relations, Israel continues to cooperate with Ramallah on security matters, cooperation defense officials say has helped prevent terror. The Shin Bet, Washington and the EU have all been reported to be warning Israel that the West Bank is at boiling point.
The PA has increasingly lost control over the northern West Bank, empowering terror groups, and spurring Israeli forces to carry out regular operations in the area.
In July, the security cabinet voted in favor of a series of steps to bolster the PA, including the approval of a new industrial zone in Tarqumiyah, near the southern West Bank city of Hebron, a move long supported by Israeli security officials, along with an extension of open hours at the Allenby border crossing with Jordan.
Also Thursday, Ben Gvir ordered the Israel Prison Service to stop processing Palestinian Authority payments to security prisoners’ canteen accounts.
According to Ben Gvir’s office, the PA transfers NIS 400 a month, per security prisoner, to a joint fund for the prison canteen. About 6,000 security prisoners are covered by the plan.
Since assuming his post in December, Ben Gvir has instituted a string of measures to decrease security prisoners’ quality of life.
Carrie Keller-Lynn and Jacob Magid contributed to this report.
