Harriet Sherwood
The Guardian
May 8, 2011 - 12:00am

Israel is under pressure to release tax revenues belonging to the Palestinian Authority (PA) which it has blocked in response to the reconciliation agreement between Fatah and Hamas.

The UN secretary general, Ban Ki-moon, and an umbrella group of countries that make donations to the PA have urged the Israeli government to hand over a sum of around 300m shekels (£53.1m). The income is used to pay the salaries of PA employees and to provide services.

The EU announced an extra €85m (£74.3m) in aid to the Palestinians after a request from the prime minister, Salam Fayyad, to cover salaries and welfare payments.

"This decision renews our commitment to support the most vulnerable among Palestinians," said the EU foreign policy chief, Catherine Ashton. "It is important that access to essential public services remains uninterrupted and the right to social services is respected."

Norway, which chairs the committee of donor states to the PA, has made an official request to Israel to unblock the tax funds. It has offered to form a "firewall" to ensure that the money does not reach Hamas.

The funds come from VAT and customs revenues due to the PA, which are collected by Israel under the Oslo accords, amounting each year to around 3.6bn shekels (£630m).

Israel has blocked tax revenues to the PA in the past, once during the second intifada and again after Hamas won parliamentary elections in 2006. After the resulting government collapsed, Israel forwarded the funds with interest.

After the reconciliation agreement was signed last week, Israel raised concern at the prospect of the Islamist party Hamas forming a government with the more moderate Fatah. The Israeli government spokesman, Mark Regev, said: "It's Palestinian money but we can't transfer it to a terrorist organisation."

He said a monthly meeting to authorise the transfer had been postponed. "No decisions have been taken but there have been preliminary discussions," Regev said.

Israel's defence minister, Ehud Barak, opposed withholding the funds. "These funds belong to [the PA] according to international agreements," he was quoted in the Israeli press as saying.

Twenty-nine US senators have written to Barack Obama demanding that aid to the PA be frozen if Hamas members join the government. Such a move, they said, "threatens to derail the Middle East peace effort". The US is scheduled to give $550m (£335m) to the PA this year.

Binyamin Netanyahu, Israel's prime minister, is expected to revise a speech he is due to deliver to the US Congress later this month in the light of the Palestinian unity agreement. He is preparing to say there is no chance of any peace deal with the Palestinians unless Hamas recognises Israel and renounces violence, according to Israeli media reports.


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