Prime Minister Benjamin Netanyahu and Finance Minister Moshe Kahlon have reportedly discussed emergency plans, should the Palestinian Authority’s financial system collapse over its refusal to accept tax dividends collected by Israel, according to television reports Sunday.
The two met Sunday to discuss what plans to put in place and what possible moves would keep the Palestinians solvent, amid fears that financial woes could cripple the Palestinian economy and destabilize the West Bank, according to the reports.
Israel announced in February that it would withhold $138 million in monthly payments to the PA — to offset the PA’s payments to Palestinians jailed by Israel for terrorism and violence, and to the families of dead terrorists.
The Palestinians have protested the law, refusing to receive any of the taxes Israel gathers for them on a monthly basis, as long as the Jewish state does not transfer them their full amount.
The taxes Israel collects and transfers to the PA make up hundreds of millions of shekels, more than half of its monthly budget.
According to the Kan public broadcaster, Israel recently tried to transfer $182 million to the PA, but the transaction was rejected.
Netanyahu and Kahlon on Sunday discussed whether to persuade PA president Abbas to accept the funds, Channel 12 reported.
Kahlon on Saturday also met with a senior PA official to discuss its financial woes, according to Channel 13, amid mounting concern over the issue.
Both the Prime Minister’s Office and Abbas’ office declined to comment, the TV reports said.
Last Sunday, the Arab League pledged $100 million per month to the Palestinian Authority to make up for funds withheld by Israel.
Earlier this month, France sent an official letter to Israel urging it to “change your decision to freeze the transfer of tax funds to the Palestinian Authority,” Israel’s Channel 12 news reported last Sunday. Israel rejected the request as “immoral” and against the EU’s own laws.
PA Finance Minister Shukri Bishara announced recently that Ramallah had undertaken a a series of austerity measures to mitigate against the impact of the lack of funds on government operations, including the slashing of public employee salaries.
A senior Palestinian Authority official reportedly warned that Hamas means to exploit the economic situation in the West Bank and pay off PA officers and security forces to take control of the territory.
In March, many PA employees received only half of their salaries.
The World Bank warned last week of an economic crisis, if the issue is not resolved.
Israel, which collects taxes on behalf of the PA, says the PA payments to terrorists and their families encourage further violence. The PA claims they are a form of welfare to families who have lost their main breadwinner.
AFP, Adam Rasgon contributed to this report.