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Israel vows to withhold $400M in tax revenues from Palestinians over statehood drive

Murat Kaynak / Anadolu via EPA

Turkish President Abdullah Gul (left) and Palestinian President Mahmoud Abbas (second left) review the honor guard during a welcoming ceremony in Ankara, Turkey, Tuesday.

JERUSALEM - Israel will withhold tax revenues from Palestinian President Mahmoud Abbas' administration until March at least in response to his statehood campaign at the United Nations, Israel's foreign minister said. 

Under interim peace deals, Israel collects some $100 million a month in duties on behalf of the Palestinian Authority in the occupied West Bank -- money that is badly needed to pay public sector salaries. 

"The Palestinians can forget about getting even one cent in the coming four months, and in four months' time we will decide how to proceed," Foreign Minister Avigdor Lieberman said in a speech Tuesday night. 

Israel says Abbas violated previous peace accords by sidestepping stalled negotiations and securing a Palestinian status upgrade in the United Nations last month. 

Debts for power, water
Israel has already withheld the December transfer, saying the money would be used to start paying off $200 million the Palestinians owe the Israel Electric Corporation. 

Lieberman, a hardliner in Prime Minister Benjamin Netanyahu's conservative coalition government, said the Palestinians also had another debt with the Israeli water authority that would have to be paid off. 

"Israel is not prepared to accept unilateral steps by the Palestinian side, and anyone who thinks they will achieve concessions and gains this way is wrong," he said. 

Palestinians had a major symbolic victory when the United Nations General Assembly voted overwhelmingly to recognize them, but the U.S. argued the new status could set back Palestinians in the path to peace. NBC's Andrea Mitchell reports.

Hamas leader returns to Palestinian territories for first time since 1967

Yasser Abed Rabbo, a senior Palestinian official, said earlier this month that Israel was guilty of "piracy and theft" by refusing to hand over the funds. 

The European Union has also criticized Israel for not handing over the cash.


"Contractual obligations ... regarding full, timely, predictable and transparent transfer of tax and custom revenues have to be respected," it said on Monday. 

UN upgrades Palestinian status, bolstering statehood claim

Israel has previously frozen payments to the Palestinian Authority during times of heightened security and diplomatic tensions, provoking strong international criticism, such as when the U.N. cultural body UNESCO granted the Palestinians full membership a year ago. 

Abbas's U.N. victory was a diplomatic setback for the United States and Israel, which were joined by only seven other countries in voting against upgrading the Palestinians' observer status to "non-member state", like the Vatican, from "entity." 

Hours after the U.N. vote, Israel said it would authorize 3,000 new settler homes in the West Bank and East Jerusalem and expedite planning work for thousands more in a geographically sensitive area close to Jerusalem. Critics say this plan would kill off Palestinian hopes of a viable state. 

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