After months of freezing tax revenue transfers as punishment for the Palestinian Authority's application to the Rome Statute, Israel announced on Friday that it will release the money to the interim government in Ramallah.
The announcement was made in a press release by the Prime Minister's Office just before sundown Friday.
This past January, Israel froze the transfer of some NIS 500 million in tax collections to the Palestinian Authority.
The move came as a protest of the formal application for membership of the International Criminal Court that was filed on Friday on behalf of the “State of Palestine.”
This is “robbery and an act more appropriate to pirates and not governments,” chief PLO negotiator Saeb Erekat said of Israel’s move. The tax money is used to pay public sector salaries and is critical to running the Palestinian Authority.
“A few hours ago, we have been unofficially informed that the government of Israel has decided not to transfer our revenues, which, according to signed agreements, are the revenues they collect on our behalf and are obliged to transfer to us,” Erekat said.
The move may be seen as a bid to rebuild bridges, particularly with the White House which criticized hawkish comments about the Palestinians that Netanyahu made in the build-up to his election victory this month.
Israel stopped the monthly transfer of $130 million of tax and customs duties that it collects on behalf of the Palestinian Authority in January after the organization applied to join the International Criminal Court.
Since then, more than $500 million has been withheld, prompting the Palestinian Authority, which administers the West Bank, to cut most of its employees' salaries by 40 percent and resort to an emergency budget.
With the deficit already at around 15 percent of GDP and the tax transfers accounting for two-thirds of income, the budget is falling into a deeper hole every month. Unemployment stands at 25 percent and output is set to contract this year, sharply increasing the threat of instability and violence.
There was no immediate comment from the Palestinian Authority.
"Prime Minister Benjamin Netanyahu approved the recommendation submitted by Defense Minister Moshe Ya'alon, the Israel Defense Forces, and the Israel Security Agency (Shin Bet) to transfer tax revenues that accrued in recent months to the Palestinian Authorities," the Prime Minister's Office said.
"In light of this decision, the tax revenues that accrued until this past February will be offset by payments for services rendered to the Palestinian population, including electricity, water, and hospital services," the statement read.
"The decision was made due to, among other things, humanitarian considerations and an overall view toward serving Israel's interests at this juncture," the statement read.
"In the deteriorating state of the Middle East, it is incumbent upon us to act responsibly and with careful consideration while at the same time waging a determined battle against extremist elements," Netanyahu said.