Israel withholds Palestinian clearance funds again, deducts $200 million

Israel decided Monday to withhold clearance funds to the Palestinian Authority, and deducted around $200 million this month, worsening a financial crisis facing the Ramallah-based authority.

A statement from Israeli Finance Minister Bezalel Smotrich’s office claimed that most of the tax revenues collected by Israel on behalf of the Palestinian Authority this month were deducted to settle outstanding bills.

“Out of a total of more than 740 million shekels ($248 million) collected this month, extensive deductions totaling approximately 590 million shekels ($197.7 million) were made,” the statement said.

“These funds were redirected to cover the Palestinian Authority’s accumulated debts to the Israel Electric Corporation, water utilities, and environmental bodies,” it added.

According to the statement, the remaining balance was frozen and not transferred as part of a policy led by Smotrich since last year “to protest steps taken by the Palestinian Authority against Israel in international institutions.”

Clearance funds refer to taxes imposed on goods imported into Palestinian areas, whether from Israel or through border crossings controlled by Tel Aviv, which Israel collects on behalf of the Palestinian Authority.

Since 2019, Israel has deducted amounts from these funds for various reasons, placing the Palestinian Authority under financial strain and leaving it unable to fully pay public sector salaries while debts to the private sector and local banks accumulate.

In February, Palestinian Finance Minister Istefan Salameh said Israel was withholding about 13 billion shekels ($4.4 billion) in Palestinian clearance funds.

“The Israeli move is a continuation of Smotrich's firm political and economic stance toward the Palestinian Authority,” Israeli Channel 7 said.

The Israeli decision adds to the financial pains facing the Palestinian Authority in recent months.

“The Israeli occupation’s blockade is not limited to the Gaza Strip, but is also working to choke the West Bank, including East Jerusalem, through political, security and settlement tools, in addition to the continued deduction of Palestinian clearance funds,” Palestinian Prime Minister Mohammad Mustafa said Sunday.

“These deductions have escalated over the past 12 months, as Israel has not transferred any tax and customs revenues to the Palestinian treasury,” he said, adding that the measures amount to “another form of occupation.”

*Writing by Lina Altawell in Istanbul