The cabinet approved a plan Sunday to transfer frozen funds earmarked for the Palestinian Authority to Norway, which would only transfer them to Ramallah with the express permission of Jerusalem, following fierce internal Israeli debate and extended American pressure.
The government’s decision — opposed by far-right minister Itamar Ben Gvir, who charges it fails to provide assurances the money won’t reach the Hamas terror group in Gaza — followed last Thursday’s cabinet discussion of a proposal to transfer the tax revenues, which are collected by Israel on the PA’s behalf, via a third party. Thursday’s meeting did not end with a vote.
“The United States and Norway respect the decision of the political and security cabinet that ordered a halt to the transfer of Gaza funds to the Palestinian Authority. Therefore, the frozen funds will not be transferred to the Palestinian Authority, but will remain in the hands of a third country,” the Prime Minister’s Office said in a statement.
“The money or its consideration will not be transferred under any circumstances, except with the approval of Israel’s finance minister, not even through a third party. Any violation of the agreement allows the finance minister to immediately freeze” all of the Palestinian tax funds, it continued, adding that Washington had agreed to serve as a guarantor of the plan’s implementation.
The development came as war continued to rage between Israel and Hamas in the Gaza Strip, sparked when the Palestinian terror group carried out a devastating attack on October 7 that killed over 1,200 people, mostly civilians, in southern Israel. The 3,000 terrorists who invaded Israel from Gaza also abducted 253 people of all ages, about half of whom remain captive in the Palestinian coastal enclave
Israel responded with an air, sea, and ground military campaign to destroy Hamas, remove it from power in Gaza, and free the hostages.
Last November, the cabinet approved a partial transfer of funds to the Palestinian Authority while retaining nearly half the initial amount — corresponding to 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 then refused to accept any of the funds, which total around NIS 275 million ($75.5 million) per month, 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.
According to the approved outline, Norway will not be allowed to release any of the frozen funds — which would have been used by the Palestinian Authority to pay salaries of government workers in Gaza — without prior Israeli permission, with Jerusalem within its rights to halt the flow of money should Oslo take any such action.
Responding to the decision, National Security Minister Itamar Ben Gvir tweeted Sunday that Prime Minister Benjamin Netanyahu “constantly moves the red line. Sometimes they give fuel, sometimes they give up humanitarian aid in exchange for humanitarian aid, last week they started moving flour trucks, and now they are making a decision that does not guarantee that the money will not reach the Nazis from Gaza.”
Ben Gvir has frequently criticized the government he is a part of over the last few months, but has said he is not considering bolting the coalition and his public posts are seen by many as primarily aimed at distancing himself from certain cabinet decisions in the eyes of his supporters.
Visiting Israel earlier this month, US Secretary of State Antony Blinken urged Israel to transfer the funds. “Those are their revenues,” he said at a January 9 press conference, adding that the PA “should have them.”
Blinken said the PA needed the money to pay its employees, some of whom do essential work in the West Bank. He cited the PA security forces, who he said were trying to keep peace, security, and stability in the West Bank — and that’s “profoundly in Israel’s interests.”
For months, the security establishment, including Defense Minister Yoav Gallant, has urged Netanyahu to reverse a cabinet decision made after October 7 to withhold the tax revenues as well as to prevent the return of some 150,000 Palestinians who were working inside Israel and the settlements.
The former decision was made 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 October 7 massacres.
The security establishment has warned that the policies risk causing the collapse of 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 over the past week, with security chiefs also warning of a potential surge in terrorism.
Netanyahu did not budge on the matter amid pushback from far-right ministers Ben Gvir and Smotrich, whose support he needs to maintain his coalition.