Breakthrough in Israeli-Palestinian Finances: Israel Releases More Funds to the Palestinian Authority, but Conditions Attached

Palestinian Prime Minister Mohamed Mustafa has announced that the Israeli Ministry of Finance has transferred NIS 435 million (107 million euros) from the revenues withheld and collected on behalf of the Palestinian Authority. Mustafa explained during a meeting with his cabinet that efforts and communications with the Israeli side continue to recover the rest of the funds, which amount to about 6 billion shekels (1.47 billion euros), according to the Palestinian news agency WAFA.

In a positive development for Palestinians, Israeli Finance Minister Bezalel Smotrich has agreed to transfer the last three months of withheld revenue to the Palestinian Authority and extend the exemption to Israeli banks working with the Palestinian side for four more months. US State Department deputy spokesman Vedant Patel welcomed this move yesterday, saying “Our call is for Israel to extend the waiver for at least 12 months and release the remainder of the withheld revenue.”

However, there are conditions attached to this transfer of funds. The Israeli authorities collect these funds on behalf of the Palestinian Authority and transfer them on a monthly basis, after deducting costs such as electricity and water. The transfer would be tied to approval by Netanyahu’s cabinet to legalize new outposts in occupied West Bank land and sanctions against senior Palestinian officials who support international legal proceedings against Israel.

The payments have been frozen on several occasions in recent years due to tensions between Israelis and Palestinians. This waiver, which was set to expire at June’s end, allows Israeli banks to process payments in shekels for services linked to the Palestinian Authority, although under an agreement, a significant portion of funds are excluded for employees residing in Gaza Strip.