Bezalel Smotrich, Israel’s far-right finance minister, made a controversial decision last year that has sparked outrage and concern both domestically and internationally. Smotrich announced that he had ordered around $35 million in tax revenue, collected by Israel on behalf of the Palestinian Authority, to be diverted to the families of Israeli victims of terrorism.
In a social media post, Smotrich defended his decision as a matter of “justice,” citing court judgments awarding compensation to relatives of terror victims. He accused the Palestinian Authority of encouraging and supporting terrorism by providing financial support to the families of terrorists, prisoners, and released prisoners.
This move has further strained the already fragile relationship between Israel and the Palestinian Authority, which is facing severe economic challenges. The decision could also escalate tensions in the region, which has seen a rise in conflict and a decline in the quality of life for Palestinians since a recent Hamas-led attack on Israel.
The U.S. State Department has condemned Smotrich’s decision, calling it “extraordinarily wrongheaded” and warning that it could destabilize the West Bank and harm Israel’s security. The Biden administration has reiterated that the tax revenues belong to the Palestinian people and should not be withheld.
Smotrich has a history of withholding funds from the Palestinian Authority, exacerbating the economic hardships in the region. The move has led to a rise in unemployment in the West Bank, as Palestinians who used to work in Israel are now unable to do so.
Experts warn that the economic troubles facing the Palestinian Authority could lead to further instability in the region. Smotrich has also threatened to withdraw indemnity granted to Israeli banks that transfer money to financial institutions in the West Bank, which could further destabilize the authority and the West Bank.
The newly inaugurated Palestinian Authority prime minister, Mohammad Mustafa, has called the fiscal situation a “very serious moment” and has sought help from European allies to address the withholding of tax revenues by Israel. The situation remains tense as both sides navigate the economic and political challenges in the region.
