The security cabinet on Thursday discussed a proposal by Finance Minister Bezalel Smotrich to transfer funds earmarked for the Palestinian Authority to a third party that would then transfer them to Ramallah, but did not hold a vote to enact the possible move, Hebrew media outlets reported.
In November, the cabinet approved a partial transfer of funds to the Palestinian Authority while retaining nearly half the initial amount — which makes up the sum the PA uses to pay its employees in the Gaza Strip — with Finance Minister Bezalel Smotrich steadfastly refusing to transfer the funds, claiming the cash could be transferred to Hamas.
The PA has refused to accept any of the funds as long as the money for services and employees in Gaza is not included. Despite prolonged US pressure for Israel to release the monies, Smotrich has remained adamant in his position.
In an unsourced report on Thursday, Channel 12 said that the finance minister has developed a proposal for the money to be transferred to a third party, such as Norway, before being handed over, allowing Israel to not be directly responsible for its transfer.
The transfer would be made on the condition that Norway — or another third country — and the United States ensure that none of the money is transferred to the Gaza Strip, Channel 12 reported.
If the PA makes such transfers, Israel will cease handing over any further tax revenues, under the terms of Smotrich’s reported plan.
This possibility was discussed in the security cabinet Thursday night, according to reports, as well as in a meeting with Smotrich, Prime Minister Benjamin Netanyahu, and Strategic Affairs Minister Ron Dermer.
The ministers were reported to broadly agree with the suggested solution, although according to the Ynet news site, National Security Minister Itamar Ben Gvir opposed the framework since it could not guarantee the funds would not reach Gaza either directly or indirectly.
Ben Gvir was said to request more details on the plan before agreeing to vote in favor.
For months, the security establishment, including Defense Minister Yoav Gallant, has urged Netanyahu to reverse the cabinet decision made after October 7 to withhold the tax revenues and prevent the return of some 150,000 Palestinians who were working inside Israel and the settlements.
The former decision was taken as part of an effort by Israel to disconnect from Gaza because some of the tax revenues are used to pay services and employees in the Strip. The latter decision was taken as a security precaution following the Gaza-ruling Hamas’s terror onslaught, in which some 1,200 Israelis were brutally killed and roughly 240 were taken hostage.
The security establishment has warned that the policies risk collapsing an already cash-strapped PA, which would leave Israel responsible for providing services to millions of Palestinians in the West Bank. Those warnings have increased in reports over the past week.
Netanyahu has not budged on the matter amid pushback from far-right ministers Ben Gvir and Smotrich, whose support he needs to maintain his coalition.
The Israel Defense Forces has continued to operate throughout the West Bank and police have been on high alert in Israel, in light of concerns about a possible escalation of violence. Earlier this week, two Palestinians from the Hebron area in the West Bank who were illegally working in Israel carried out a deadly terror attack in Ra’anana, killing an elderly woman and wounding 17 others.