Punishing the P.A. for 'lawfare' against Israel, finance minister withholds millions in tax revenue

Israeli Finance Minister Bezalel Smotrich on Sunday withheld 139 million NIS ($39.6 million) in tax revenue from the Palestinian Authority, a move intended to punish the P.A. for its “lawfare” against the Jewish state at the International Court of Justice. 

The Israeli government plans to transfer the tax revenue to Israeli victims of Arab terrorism and to offset the P.A. regime’s controversial pay-to-slay policy that incentivizes terrorism against Israel and Jews. 

The Israeli finance minister, known for his hawkish political positions towards the P.A., warned that Israel had no interest in the P.A.’s continued existence as a terrorist-sponsoring entity. 

“The P.A. must decide if it wants to continue to exist and, if so, will deal with the needs of its Arab citizens in Judea and Samaria, and will stop engaging with terror, or if it does not want to exist and prefers to return to the situation where it is Israel’s enemy,” Smotrich said.

The finance minister stressed that the P.A. cannot be a peace partner to Israel while simultaneously financing terrorism against it. 

“There is no situation in the world where, on one hand, the P.A. is a partner that receives funds from us and, on the other hand, it is an enemy that is leading [terror activities] and supporting the murder of Israelis,” Smotrich said. 

While previous Israeli governments acknowledged the problematic two-sided nature of Israel-Palestinian relations, Jerusalem has mostly been guided by the belief that security cooperation with Ramallah is in Israel’s best interests. 

However, Smotrich said he believes that the P.A.’s continued existence as a terror entity is not in Israel’s interests. 

“As long as the P.A. supports terror and is an enemy, why am I interested in helping it exist? My only interest in its existence is if it operates within existing agreements … and takes care of its citizens, and thwarts and acts against terror, and works in conjunction with the Israeli security forces – then the P.A. would be an authority with which one can have an in-depth relationship,” Smotrich said. 

Abie Moses, the head of the Israel-based Organization of Victims of Terrorism, welcomed Smotrich’s position as an “important decision.” However, he stressed that much work remained for the new Israeli government in dealing with the P.A.’s support of terrorism against Israelis. 

“The inauguration of a new Knesset is an opportunity to atone for the long-standing neglect of the victims of enemy hostilities, and to allocate the necessary resources in order to take care of the rights of thousands who lost their loved ones, who are struggling to survive and trying to continue to live,” Moses said.

By contrast, in August 2021, former Israeli Defense Minister Benny Gantz stressed the importance of Israel maintaining its security ties with the P.A. 

“I told Abu Mazen [Mahmoud Abbas] that we aren’t going anywhere and that the Palestinians aren’t going anywhere. I went to the meeting in order to build confidence and preserve the interests of the State of Israel and the important ties we have with the Palestinian Authority, which I believe we need to strengthen,” Gantz said at the time.

In a recent interview with the left-wing Israeli daily Haaretz, the P.A.’s Prime Minister Mohammad Shtayyeh, warned that the Israeli government’s sanctions on the P.A. “will promptly lead to its collapse.”