Finance Minister Yuval Steinitz has apparently cancelled the latest routine handover of some NIS 300 million (approx. $88 million) in customs funds and other levies collected on behalf of the Palestinians, as stipulated in the Oslo Accords .
Israel said last week that it would impose sanctions in response to Palestinian President Mahmoud Abbas' surprise announcement of a unity deal with Hamas.
Palestinian Prime Minister Salam Fayyad said that Israel's decision will not impede the unity deal between the Palestinian factions.
Fayyad, speaking with the Palestinian WAFA news agency, added that "the PA has contacted some very influential elements worldwide, to try and convince Israel not to take this step. We are determined to see the reconciliation through despite this decision."
Fatah Central Committee member Saeb Ereket denounced the decision, calling it "financial piracy."
"The Israeli decision is financial piracy that reflects Israel's dangerous intentions," he Erekat, adding that Jerusalem has no right to interfere with internal Palestinian affairs.
A Treasury spokeswoman refused to confirm the report, or other reports suggesting Israeli officials would also cancel talks with the Abbas administration aimed at updating the tax transfer mechanism between Israel and the PA, which provides it with $1 billion to $1.4 billion annually – two-thirds of its budget.
Steinitz said Sunday that his ministry did not cancel the funds transfer, but rather only suspended it temporarily: "We decided to postpone the meeting until the situation becomes clear.
"We need to know if these funds will now find their way to Hamas, possibly to fund the purchase of rockets that will then be fired on the south. The burden of proof lies with the Palestinian Authority, so show that not even one shekel is given to Hamas and funds terror."
The Palestinians, he added, "will have to choose between sharing funds with Hamas and the continuing collaboration with Israel and the rest of the world."
Yedioth Ahronoth and Reuters contributed to this report
First published: 10:39, 05.01.11