Palestinians Reject Cash From Israel to Protest Annexation Plan

(Bloomberg) --

The cash-strapped Palestinian Authority rejected a monthly tax transfer from Israel, stepping up its protest against the Israeli government's declared intent to annex land the Palestinians claim for a future state.

The authority relies on these funds, which total about 700 million shekels ($200 million) each month, to pay government employees and provide basic services. While Palestinians could be hurt by the move, it is an instrument of pressure the authority has wielded on several occasions to try to push Israel to reverse course on policy decisions. Without these transfers, which account for about 60% of its budget, the authority risks collapsing and forcing Israel to take responsibility for 2.6 million Palestinians.

Israel has said it plans to annex some 30% of the West Bank, as provided for in the Trump administration's Middle East peace plan. Action could be taken as early as July 1, under the new Israeli government's coalition agreement.

Hussein Al Sheikh, the Palestinian Authority's head of the General Authority of Civil Affairs, said the rejection of the May tax transfer was an extension of last month's declaration that the Palestinians are no longer bound to past agreements to cooperate with Israel and the U.S.

“We refuse to be blackmailed by the Israeli government,” Palestinian government spokesman Ibrahim Melhim said.

Israel's Finance Ministry declined to comment. Under 1990s accords, Israel collects customs duties and other taxes on behalf of the Palestinians and transfers them to their limited self-rule government each month.