JERUSALEM, (Reuters) – In a potential blow to the cash-strapped Palestinian Authority, Israel said on Tuesday it expects to suspend monthly tax payments during a policy review after the shock election victory of the Islamist group Hamas.
Palestinian Economy Minister Mazen Sonnoqrot decried what he called “an irresponsible and grave decision” and said it would have “negative economic and social consequences on the Palestinians”.
Hamas spokesman Mushir al-Masri accused Israel of “trying to steal Palestinian money”.
The Quartet of major powers trying to broker Middle East peace said on Monday that international donors would continue to aid the caretaker government of President Mahmoud Abbas, at least until Hamas formed a new administration.
The Quartet — Russia, the European Union, the United States and the United Nations — said Hamas must reject violence and recognise Israel or risk losing aid in future.
Israel collects customs revenue on behalf of the Palestinians and hands it over to the Authority, and the next automatic payment falls due on Wednesday, Feb. 1.
The transfers typically total about $50 million a month — this month’s payment was expected to be $55 million — and the salaries of about 140,000 Palestinian employees depend to a large extent on receipt of the money.
“Acting Prime Minister (Ehud) Olmert has ordered a policy review on whether or not automatic transfers should continue. That review is ongoing and has not reached final decisions,” said Foreign Ministry spokesman Mark Regev.
“Pending final decision, it is most likely that automatic transfers will not continue,” he said.
Olmert said on Sunday Israel would boycott a Palestinian government that included Hamas, which scored a victory over the long-dominant Fatah party in Wednesday’s parliamentary election.
Fatah leaders have so far rejected joining any coalition with Hamas, whose anti-corruption platform, charity network and strong resistance to Israel since the Palestinian uprising began in 2000 propelled it to victory.
Regev said he could not say how long the review of the Israeli tax payments would take. The Palestinian Authority faces a financial crunch if Israel withholds the money.
Unemployment in the Palestinian territories runs high, at 22 percent, and half the Palestinian population live in poverty. In the Gaza Strip, many Palestinians live on an average of $2 a day.
Regev said Israel’s position on the tax payment was “in synch” with the international consensus.
Hamas has rejected as “blackmail” the Quartet’s demands it renounce violence against Israel or risk losing aid. It also suggested it could look for alternative sources of funding in the Arab world and beyond.
“The Quartet decision was unjust and a punishment to our people for using their freedom of choice in a democratic and fair election,” said Hamas spokesman Masri.
But he added: “Hamas seeks to build bridges of trust with all international parties.”
Jihad al-Wazir, the acting Palestinian minister of finance, said Israeli officials had promised in talks on Sunday to make the tax payment on schedule, but that Israel told the Palestinians on Monday it would suspend the transfer.
“We contacted the Quartet and the U.S., telling them that the money is due for past requirements. The money is not going to Hamas but to employees,” Wazir said.