Increasingly, there are calls for Israel’s Prime Minister Benjamin Netanyahu to release taxes Israel owes to Palestinians. Unless Netanyahu releases those funds, Israel runs the risk of confronting another Palestinian intifada, warn several international groups.

Taxation in the Palestinian territories is a complex issue. It may involve payment to the Palestinian Authority (PA) and/or Israel within the context of Israel’s conflict with the Palestinians. On other occasions before, Israel has withheld Palestinians taxes, in retaliation for actions by the Palestinians.

For example, in June 2008, Israel withheld taxes owed to the Palestinian Authority. This action was apparently taken as retaliation for what the Israeli government interpreted as Salam Fayyad’s (the PA Prime Minister) attempt to undermine relations between Israel and the European Union.

The more than $100 million now withheld by the Israeli government’s express its opposition to the Palestinian Authority’s policy of pursuing United Nations membership, renewing power-sharing with Hamas and as a “punishment” for the Palestinian Authority recent incorporation into UNESCO.

The transfer by the Israeli government of money to the Palestinian Authority is made up of custom duties, taxes on Palestinian purchases of Israeli goods and other taxes on Israeli fuel bought by the Palestinians. The money is critical to pay tens of thousands of people, among them the Palestinian Authority security forces who work on preventing attacks on Israelis and whose professionalism has won praise both from Israel and the United States.

Although Prime Minister Netanyahu has fully backed Finance Minister Yuval Steinitz on this move, in the past Defense Minister Ehud Barak had described this kind of delay as “capricious.” He indicated that these were Palestinian funds and that if the Israeli government refused to transfer those funds it was a violation of international agreements.

While other Israeli defense officials said that cutting funds to the Palestinians threatens’ Abba’s moderate Palestinian Authority, Foreign Minister Avigdor Lieberman said that he vehemently opposes the release of Palestinian funds, and stated that Palestinians use the money from tax revenues to fund housing for terrorists. He also threatened to dismantle the governing coalition if the funds are released.

UN Middle East peace envoy Robert Serry warned the Security Council that freezing the transfer of Palestinian funds undermined the PA’s state-building gains and the security forces in charge of upholding law and order in the West Bank. According to Oussama Kanaan, the International Monetary Fund’s mission chief in the West Bank and Gaza, unless the transfer of funds proceeds normally before December 1, up to one million Palestinian workers would go unpaid.

In addition, in recent days, United Nations Secretary General Ban Ki-Moon and senior American officials urged Prime Minister Netanyahu to release the funds, as did Tony Blair, the representative of the Middle East peace quartet.

In a recent editorial, the Israeli newspaper Haaretz stated, “None of Netanyahu’ reasons are relevant or legitimate. The money is Palestinian money, and it must go to the Palestinians. The fact that Israel collects these funds is a technicality, and doesn’t justify acts of abuse and revenge. Concern for the Likud primaries and the struggle with Lieberman over right-wing votes are putting Israel’s national security at risk and making a third intifada more likely.”

Dr. Cesar Chelala is a co-winner of an Overseas Press Club of America award.

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