Israel releases Palestinian tax funds as diplomatic front advances

OCCUPIED JERUSALEM — Israel said Friday it would be releasing to the Palestinian Authority tax funds it had been withholding as punishment, as diplomatic pressures on Israel were coming to a head.

The move could help to preempt imminent Palestinian diplomatic measures against Israel, as well as disarm tensions with the United States and international community after a polarising Israeli election campaign.

Prime Minister Benjamin Netanyahu's office said revenues accumulated over three months, frozen by Israel since January in retaliation for a Palestinian move to join the International Criminal Court (ICC), would be transferred after normal deductions for services.

But it did not say whether Israel would resume the normal monthly payment of around $127 million (118 million euros) in customs duties levied on goods destined for Palestinian markets that transit through Israeli ports.

A spokesman for Netanyahu, contacted by AFP, would not say.

The Palestinians reacted with caution.

"Until now we haven't received any money, nor have we officially been informed of anything," Palestinian Authority spokesman Ihab Bseiso said. "We will wait to be informed officially; currently we are only hearing about this through the media."

The decision comes 10 days after Netanyahu was reelected and subsequently chosen to form the next government following a campaign in which he pledged to continue settlement activity and prevent the establishment of a Palestinian state, which exacerbated diplomatic tensions with Washington.

Netanyahu later back-tracked on remarks opposing a two-state solution, while plans for construction in East Jerusalem — which the Palestinians want as the capital of a future state — were put on hold.

The Israeli decision will help to sustain the Palestinian Authority, facing financial collapse without tax revenues that constitute some two-thirds of its annual budget, excluding foreign aid.

The move to release the funds took into consideration "humanitarian concerns" and "an overview of Israel's interests at this time”, the Israeli statement read.

"Given the deteriorating situation in the Middle East, one must act responsibly and with due consideration alongside a determined struggle against extremist elements," Netanyahu was quoted as saying.

On Wednesday, the Palestinians will formally become members of the ICC and can proceed with legal action there against Israeli officials.

They have said they intended to pursue Israeli war crimes allegedly committed during last summer's war in the Gaza Strip, as well as Israel's policy of building settlements on occupied Palestinian lands.

A Palestinian state living side by side with Israel in peace is the international community's vision for an end to the decades-long conflict.

The White House recently said it may withdraw crucial diplomatic cover for Israel at the UN Security Council as it reevaluates its position. Such a move could prove problematic for Israel if the Palestinians resubmit a draft resolution setting an end date for the Israeli occupation.