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Israel halts transfer of tax revenue owed to Palestinians

JERUSALEM — Israel said Sunday that it is delaying the transfer of $89 million in tax revenue belonging to the Palestinian Authority, the latest sign of souring relations in connection with a proposed unity government between rival Palestinian factions Fatah and Hamas.

Finance Minister Yuval Steinitz said Israel is concerned that the money — including customs fees and taxes collected by Israel on behalf of Palestinians — could be used to benefit Hamas if the militant group announces a joint government with Fatah as expected this week.

Hamas, which Israel and the United States call a terrorist organization, refuses to recognize Israel's right to exist, or to renounce the use of violence.

Israeli officials have warned Fatah — a moderate, secular party based in the West Bank — that it would have to choose between ties with Israel or ties with the Islamist group, which has controlled Gaza since seizing power in 2007 after a brief armed clash with Fatah.

"The onus is on them to prove that the money we transfer to them — even if it is originally their money — does not go to terror organizations, terror operatives and the procurement of rockets," Steinitz said.

Palestinian leaders condemned the delay, calling it an act of "piracy" and "war."

Palestinian Authority Prime Minister Salam Fayyad said the decision would not discourage the Palestinian parties from completing the reconciliation agreement, which is scheduled to be signed this week in Cairo.

Under an ongoing arrangement, Israel transfers about $1.2 billion to the Palestinian Authority each year, accounting for about two-thirds of its budget. Much of the money comes from custom duties paid on Palestinian imports to the West Bank that pass through Israeli ports. Israel is required under past peace agreements to pass along the money.

Israel halts transfer of tax revenue owed to Palestinians 05/01/11 [Last modified: Monday, November 7, 2011 5:09pm]
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