Enlarge imageBy Tali Caspi
JERUSALEM (Reuters) - Israel decided on Sunday to release to the Palestinians tax revenues it froze after Hamas’s election victory but said future transfers, vital to the Palestinian economy, were unlikely.
Under pressure from Washington, interim Prime Minister Ehud Olmert approved the nearly $55 million (31 million pound) transfer but said the Jewish state would now decide on a month-to-month basis whether to make any future tax payments. He said co-operation in other areas would also be re-evaluated.
Israel’s reversal coincided with the disclosure that Palestinian Authority officials had stolen or squandered at least $700 million from its coffers over the past few years.
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Israel had been scheduled to transfer the money to the Palestinian Authority last Wednesday but announced at the time that it had decided to suspend automatic payments pending a policy review after Hamas won the January 25 election.
The United States had urged Israel to keep handing over monthly customs revenues it collects on behalf of the Palestinian Authority at least until Hamas, which has called for the destruction of the Jewish state, enters the government.
Completing the review, Olmert’s cabinet decided to transfer the sum Israel owed for January, minus a collection fee and deductions for Israeli electricity and health care services used by Palestinians, a government official said.
"Since Hamas hasn’t yet set up a government and the new parliament is not yet sworn in, every month we will take a new assessment," Olmert told ministers.
He said Israel would no longer make the monthly tax payment transfers automatically, and that this reassessment would also apply to past agreements with the Palestinians for building a Gaza seaport, and new desalination and sewage plants.
Israel’s cabinet also decided on Sunday not to let members of the Palestinian parliament travel from the Gaza Strip to Ramallah in the occupied West Bank for their swearing in.
A Hamas leader said on Saturday the group hoped to form a government this month. Parliament is to convene on February 16.
In a surge in violence, a Palestinian stabbed to death a woman and wounded five other passengers on a minibus in the central Israeli city of Petah Tikva hours after an Israeli helicopter gunship killed three militants in the Gaza Strip.
The Israeli air strike followed a rocket attack from Gaza on Friday that wounded three Israelis including a baby.
It was the worst bloodshed since Hamas scored a crushing victory -- on a platform of ending corruption in the Palestinian government -- over President Mahmoud Abbas’s long-dominant Fatah faction in the parliamentary election.
LAST PAYMENT
Announcing the decision to transfer the tax, cabinet minister Zeev Boim said: "It looks like it will be the last payment before a Hamas government is formed as Hamas does not seem to be changing its position with regard to Israel."
The tax revenues Israel collects on behalf of the Palestinians are a main source of funding for the Authority’s budget and are used to pay 140,000 government workers.
"This is our money. This is not a favour," Palestinian Economy Minister Mazen Sonnogrot said after the decision. "I hope that such payments will continue in the future."
To make up for lost revenue, the Palestinians have said they hope to receive cash soon from Saudi Arabia and other Arab states.
The Palestinian Authority runs on a budget of about $100 million a month. In addition to the taxes collected by Israel, it receives about $1 billion a year from international donors.
At a Gaza news conference, Palestinian Attorney-General Ahmed al-Moghani said 25 officials had been arrested and 10 had fled abroad in a corruption investigation.
(Additional reporting by Adam Entous in Jerusalem, Mohammed Assadi in Ramallah and Nidal al-Mughrabi in Gaza)
