Israel announced Nov. 30 that it would release $100 million of tax funds owed to the Palestinians, ending a standoff that the Palestinians say has caused grave damage to their fragile economy.
The move followed heavy pressure from the United States, United Nations and Europe on Israel to free the money. Israel collects the tax funds for the Palestinians and transfers the money each month, in accordance with partial peace agreements from the 1990s.
Israel froze November’s transfer in response to Palestinian efforts to win U.N. recognition of their independent state. The Israeli decision came after the Palestinians were accepted to the U.N. cultural agency UNESCO, which was part of a broader effort for admission as a full member state at the United Nations.
Israel accuses the Palestinians of trying to bypass peace talks through the campaign. It says that a Palestinian state can be established only through a negotiated peace deal.
Since the UNESCO victory, the Palestinian campaign at the U.N. has stalled due to deadlock in the Security Council, which must approve full membership. Palestinian officials have not yet decided how to proceed.
Prime Minister Benjamin Netanyahu’s office said he decided to release the money because the Palestinians appear to have suspended their “unilateral moves.” That statement said the decision would be “reassessed” if the Palestinians resume these steps.
On Nov. 29, however, Palestinian President Mahmoud Abbas reaffirmed that he remains committed to the bid for U.N. membership, saying recognition was the Palestinians’ “legitimate right.”
The two conflicting statements could lead to future disputes over the tax transfers and other areas of cooperation.
Israel has also hinted that it would end the payments if Abbas carries out a reconciliation agreement with its rival Hamas. The Palestinians hope to hold elections next May that will end a rift that has left them with rival governments since Hamas seized control of the Gaza Strip in 2007.
The tax funds from customs duties and other fees are needed by the Palestinian government, the largest single employer in the Palestinian territories, to pay tens of thousands of civil servants, as well as security forces.
Palestinian Prime Minister Salam Fayad had warned that if the funds were not restored, he would be unable to pay upcoming salaries and said the withholding was causing heavy economic damage. The Palestinians have also complained that Arab nations have not fulfilled their pledges of economic aid.
Donor nations and Israeli security officials urged Netanyahu to release the money, saying cash shortfalls destabilize the limited self-rule government in the West Bank.
Israeli-Palestinian peace talks have been stalled for three years. The Palestinians say they will not resume negotiations unless Israel halts settlement construction in the West Bank and east Jerusalem. Israel says talks should resume without preconditions.
Abbas met Nov. 30 in Amman, Jordan with the head of Israel’s parliamentary opposition, Tzipi Livni. She urged him to abandon unilateral moves and return to negotiations, according to a statement from her office.