The Palestinian leadership on Wednesday condemned remarks by Israeli finance minister that withholding Palestinian money was an initial warning to the Palestinian National Authority.

The statements by the minister, Yuval Steinitz, were "racial," said Yasser Abed Rabbo, a member of the PLO's Executive Committee. "They indicate that collective punishment is the easiest policy Israel resorts to."

Israel froze the transfer of monthly tax revenues it collects on behalf of the PNA after Palestinian President Mahmoud Abbas's Fatah party reached an agreement to form a unity government with Hamas, the Islamic movement that is based in the Gaza Strip and doesn't recognize Israel.

Earlier today, Israel Radio reported that Steinitz said that the tax revenues may remain held for more than 10 days and that it was a warning from Israel to the PNA.

The PNA gets two thirds of its annual budges, estimated at 1.4 billion dollar, from the tax revenues. The Israeli decision to freeze the transfer of money left the PNA unable to pay for its employees this month.