Israel transfers USD 1bn to cash-strapped Palestinian Authority

The Palestinians resumed contacts with Israel last month following President-elect Joe Biden's victory in the U.S. election. Biden is opposed to annexation and has promised a more evenhanded approach to the conflict.

The taxes are a key source of revenue for the Palestinian Authority, which administers parts of the Israeli-occupied West Bank. It was forced to cut the salaries it pays to tens of thousands of civil servants, worsening an economic crisis caused by the coronavirus pandemic. Hussein al-Sheikh, a close aide to Palestinian President Mahmoud Abbas, confirmed the receipt of nearly 3.8 billion shekels (around $1.1 billion) from Israel. Israel's Finance Ministry said the funds were transferred following the approval of the Israeli Security Cabinet last month.

Israel said it would deduct an amount equal to what the Palestinian Authority pays to the families of prisoners and those killed in the conflict, including militants implicated in attacks that killed Israelis. Israel says the so-called Martyrs' Fund incentivizes violence, while the Palestinians say it provides aid to needy families. President Donald Trump's Mideast plan, unveiled in January, would have allowed Israel to annex a third of the West Bank, including all its Jewish settlements. The Palestinians immediately rejected the plan, and Abbas announced in May that he was cutting all ties to the U.S. and Israel, and would no longer abide by past agreements with them.

Israel shelved its annexation plans in August after the United Arab Emirates agreed to normalize relations, but Israeli Prime Minister Benjamin Netanyahu said the pause was only temporary. Trump took unprecedented steps to support Israel and isolate the Palestinians, including moving the U.S. Embassy to contested Jerusalem, cutting off aid to the Palestinians and ending decades of U.S. opposition to Israeli settlements, which the Palestinians and much of the international community view as a violation of international law.

Biden has vowed to restore aid to the Palestinians and press both sides to resume the long-moribund peace process, without providing much detail about his approach.