Smotrich Vows to Freeze PA Funds After European Nations Back Palestinian State

By Yoni Weiss

Finance Minister Bezalel Smotrich at the Knesset. (Oren Ben Hakoon/Flash90)

Finance Minister Bezalel Smotrich called on Prime Minister Binyamin Netanyahu on Wednesday to take measures against the Palestinian Authority following the unilateral recognition of Palestinian statehood by Norway, Ireland, and Spain, and the International Criminal Court (ICC)’s decision to pursue arrest warrants against Netanyahu and Defense Minister Yoav Gallant.

One of these measures includes Smotrich’s announcement to stop transferring tax revenues to the PA. These revenues are collected by Israel as part of the Paris Protocol signed in 1994. Smotrich also stated that he would not extend indemnity to correspondent banks that transfer funds to banks in Yehudah and Shomron.

Israel’s Security Cabinet approved a framework in January to transfer the PA’s deducted tax revenues to Norway after Smotrich initially refused to deliver the funds, raising concerns about the PA’s potential collapse. The U.S. offered to transfer the money to a bank account in Norway, where it would accrue interest, while Israel would transfer the remaining funds to the PA. The PA had refused to withdraw the relative portion held by Israel until the agreement was reached. Now, Smotrich has declared the arrangement void and plans to halt the transfer of funds entirely.

In a letter to Netanyahu, Smotrich wrote, “At the previous government meeting, I and many other ministers demanded severe measures against the Palestinian Authority for its unilateral actions, including pursuing statehood recognition at the U.N. and through bilateral agreements, and legal action against Israel at the ICC.”

Smotrich emphasized the urgency for an immediate response that would impose significant costs on the Palestinian Authority and deter it and other countries from similar actions. He also asked Netanyahu to approve the immediate convening of the Planning Administration in Yehudah and Shomron to approve the construction of 10,000 housing units, including in Area E1. Additionally, he urged for a decision to establish a settlement for every country recognizing a Palestinian state, to cancel the transfer of tax revenues to the PA, to bolster settlements in Yehudah and Shomron, and to permanently revoke all VIP permits for senior PA officials, imposing further economic sanctions on them and their families.

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