February 20, 2006
Israel Suspends Tax Money Flow to Palestinians
By STEVEN ERLANGER
JERUSALEM, Feb. 19 — The Israeli cabinet decided Sunday to immediately
freeze the transfer of about $50 million a month in tax and customs receipts
due to the Palestinian Authority, arguing that the swearing in of a Hamas-dominated
legislature on Saturday meant that the Palestinians were now led by the
"It is clear that in the light of the Hamas majority in the parliament and
the instructions to form a new government that were given to the head of
Hamas, the Palestinian Authority is in practice becoming a terrorist
authority," Ehud Olmert, the acting prime minister, told his cabinet. "The
state of Israel will not agree to this."
Although the cabinet decided to hold back on other penalties it had been
considering, its move to withhold the receipts immediately put it at odds
with its main ally, the United States, and the rest of the so-called quartet
— the European Union, Russia and the United Nations — that has been
promoting peace efforts between Israel and the Palestinians.
The quartet has said that its financing for the Palestinian Authority will
continue until a new Hamas-led government is in place, a process that could
take five weeks or longer. Even as Israel acted to cut off money to the
Palestinians, the quartet's representative, James D. Wolfensohn, was in the
Middle East talking with Arab countries in the Persian Gulf region to try to
raise money for the Palestinian Authority until Hamas fully takes over the
The State Department said it would have no comment on the Israeli decision.
The Israeli move means that Mr. Olmert, in the midst of an election
campaign, will not have to transfer customs and taxes for February to the
Palestinians. He was sharply criticized from the right for having
transferred the January payment, and if he had agreed to the quartet's
timetable, he might even have had to transfer the payment due for March.
The Israeli move means that the immediate shortfall of the functionally
bankrupt Palestinian Authority will grow from what had been about $60
million a month of its budget to about $110 million. The budget largely goes
to pay 135,000 workers, including about 58,000 in the security services. The
salary situation has already become critical, with many members of the
security services staging armed demonstrations in the past few weeks to
demand their pay.
Hamas says it will seek economies and other aid from the Muslim world,
including Iran, to ease the budget situation.
In Gaza City, the Palestinian president, Mahmoud Abbas, said the
Palestinians were already in a financial crisis. "Unfortunately, the
pressures have begun and the support and the aid started to decrease," he
said. "Therefore we are currently in a financial crisis, and we hope to
overcome it month by month."
Mr. Abbas went to Gaza City to meet Monday with Ismail Haniya, 42, whom
Hamas confirmed would be its choice for prime minister, to ask him to form a
government. Once Mr. Haniya accepts the charge, he will have five weeks to
form a government, though he says he will need less time than that.
On Saturday, Mr. Abbas, in a speech to the new parliament, said he expected
a new government to accept previous agreements with Israel and to support
negotiations with it — positions Hamas rejects. He did not specifically
require an explicit recognition of Israel. Hamas is expected to move slowly
for now, leaving relations with Israel in the hands of Mr. Abbas and the
Palestine Liberation Organization.
"We will start a dialogue with President Abbas and the other factions," Mr.
Haniya said in remarks broadcast on Al Jazeera, the Arab satellite channel.
He also criticized Israel's new penalties against the Palestinians, calling
them "part of the continued Israeli aggression against the Palestinian
The Israeli cabinet decided to hold back for now on other penalties that
would have further serious effects on Palestinian life, such as preventing
Palestinian workers from entering Israel or making it more difficult for
Palestinian goods to be transported into Israel. Instead, the cabinet said
it would urge the international community to refrain from all financial
assistance to the Palestinian Authority except for relief aid, would seek to
prevent any new shipments of arms or equipment to the Palestinian security
services, and would "increase security checks" at crossings between Israel
"These are measured and graduated responses to the swearing in of a Hamas
legislature," said Raanan Gissin, an Israeli spokesman. "The point is to
leave some ammunition in the magazine and give Hamas and the Palestinians
the chance to assess the consequences of failing to meet the international
Israel and the quartet have threatened to isolate Hamas and cut back aid to
the Palestinian Authority unless a new government complies with three
conditions: recognizing Israel's right to exist, forswearing violence and
accepting previous Israeli-Palestinian agreements, including the 1993 Oslo
accords, which are predicated on negotiations with Israel leading to a
permanent two-state solution.
Hamas rejects those conditions, but is seeking wording to satisfy at least
part of the world community, a senior Western diplomat said.
But Mr. Olmert, in the middle of an election campaign, listed a much harsher
version of those conditions than appears in the quartet's Jan. 30 statement
of them. Mr. Olmert said relations with the Palestinians will be downgraded
and receipts withheld unless Hamas "fully accepts the principles that the
international community has presented to it." He listed the principles as
"recognition of the state of Israel and abrogation of the Hamas covenant,
the renunciation of terrorism and the dismantling of terrorist
infrastructures (by adopting the road map and accepting its principles), and
recognizing all understandings and agreements between Israel and the
But the quartet statement did not mention Hamas, let alone of any need for
it to abrogate its covenant. The statement said, "It is the view of the
quartet that all members of a future Palestinian government must be
committed to nonviolence, recognition of Israel and acceptance of previous
agreements and obligations, including the road map."
Mr. Olmert's version appeared to be an effort to talk tough, even as some
members of the quartet are beginning to discuss whether a Hamas acceptance
in principle of a 2002 Arab peace proposal, long rejected by Israel, would
be enough be considered a recognition of Israel.
The 2002 proposal says that if Israel agrees to return to boundaries before
the 1967 war, accepts a sovereign Palestinian state in the rest of Palestine
with East Jerusalem as its capital, and finds a "'just solution" to the
Palestinian refugee question, then Arab states will "consider the
Arab-Israeli conflict ended, and enter into a peace agreement with Israel,
and provide security for all the states of the region."
The senior diplomat speculated that if Hamas offered a longer truce and
folded its military wing into the Palestinian security services, some in the
international community, in particular some European countries, might give
Hamas the benefit of the doubt in the name of preserving ties with the
Palestinians and providing aid to an already poor population.
Álvaro de Soto, the United Nations representative to the quartet and Kofi
Annan's representative to the Palestinian Authority, said in an interview
that the Israelis needed "to give it a chance — you may be wrong" about the
consequences of a Hamas victory.
"We've said that the review of foreign assistance will happen in view of the
commitments of the new government," he said. "Let's wait and see when
there's a government in place and a program that's approved by the
legislature. Anything before that is premature. In fact, now is the time to
influence them to move in the right direction."
"We want to avoid massive punishment of the Palestinian people," Mr. de Soto
said. "There's a plastic moment here, and the outcome is not predetermined."
It is not clear whether Mr. Abbas and Mr. Haniya, in their talks, will be
able to bridge their fundamental differences. But Sadi Krunze, a former
Fatah cabinet minister, praised Mr. Haniya. "Haniya is not close-minded,"
Mr. Krunze said. "He can work with all the factions, and he can cooperate
with the president."
Israel has killed several senior Hamas leaders in recent years, and Mr.
Haniya survived an Israeli airstrike three years ago on a meeting attended
by top figures in the group.
Mr. Haniya, a father of 12, lives in Gaza City's Beach Refugee Camp, where
he was born. His three-story home, among the other cinderblock houses in the
camp, is also his office.
He has a degree in Arabic literature from the Islamic University in Gaza
City and was a dean there for many years. Israel arrested him several times
in the late 1980's and early 1990's, and he was deported to Lebanon in 1992
with other Hamas members, but returned to Gaza a year later. In 1998, he
took charge of the office of Sheik Ahmed Yassin, whom Israel killed in 2004.
On Sunday, an Israeli airstrike killed two Palestinians who Israel said were
planting a bomb along the perimeter fence of the Gaza Strip, near Khan Yunis
in the south.
In the West Bank, Israeli forces fatally shot two Palestinians in the Balata
camp in Nablus. Palestinians said the men were throwing stones at troops;
the Israeli Army said they were planting bombs. [Early on Monday, Israeli
forces in Nablus fatally shot a senior member of Islamic Jihad, The
Associated Press quoted Palestinians as saying. The Israeli military said,
according to initial reports, that Israeli soldiers had opened fire on armed
Palestinians, killing a Fatah militant.]
Three Palestinian teenagers from Bethlehem were arrested en route to
Jerusalem carrying a pipe bomb, knives and homemade grenades. They told the
police that they had been sent on behalf of Islamic Jihad.
Greg Myre contributed reporting from Gaza City for this article.