JERUSALEM (AP) – Israel’s central bank governor, Stanley Fischer, indicated Saturday that he would advise the government to transfer to the Palestinians millions of dollars in taxes and customs duties it collects on their behalf.
Israel, unnerved by Hamas militants’ surprising victory in Palestinian elections, announced last week that it would hold up $45 million in January taxes, a move that exacerbated a budget crisis that has deepened in the Palestinian Authority since the balloting.
Israel collects the money from Palestinian workers and merchants under an economic accord from the 1990s. It was this agreement that Fischer alluded to when Israel Radio asked what he would advise the government to do regarding the tax transfers.
“I generally prefer to abide by agreements I’ve signed,” Fischer said. “So that is at least one rationale for transferring the money. There are all kinds of other rationales, but that is my starting point.” Israel’s central banker also serves as the government’s economic adviser, but the counsel is non-binding. Fischer said he has still not discussed the matter with the government.
The U.S. and Europe have also brought financial pressure to bear on the Palestinians, threatening to cut off aid if Hamas, which killed hundreds of Israelis in suicide bombings, doesn’t renounce violence or recognize Israel’s right to exist before it takes power.
Aid cuts could force widespread layoffs and plunge Palestinian areas, already beset by violence and disorder, deeper into chaos.