Ma'an News Agency
April 2, 2012 - 12:00am

RAMALLAH (Ma'an) -- Arab nations meeting at a Baghdad summit last week pledged to compensate the Palestinian Authority if Israel freezes delivery of tax revenues, a senior official told government media.

Fatah official Muhammad Shtayyeh told Voice of Palestine radio on Sunday that nations agreed at the Arab League summit pay the PA $100 million per month, roughly the sum of customs taxes collected by Israel on the PA's behalf under international agreements.

Israel froze the transfer of tax revenues to the PA twice in 2011, when Hamas and Fatah leaders agreed to end their four-year division.

Last week, Israeli daily Haaretz reported that Israeli government ministers support a new freeze after the UN Human Rights Council agreed to investigate Israeli settlements.

Shtayyeh told Voice of Palestine he does not expect Israel to follow through, and if it does, only for a short time, as the government realizes "such a step will create chaos."

The Fatah official said the PA would not yield to blackmail in return for funds.

He said the treasury lost about $350 million each year due to tax evasion because Israel controls all goods crossings into the Palestinian territory.

In March, officials said that the PA and Israel were holding economic talks, despite frozen peace negotiations, in a bid to revamp revenue collection and help relieve the PA's deepening debt crisis.

Measures under discussion include developing electronic records of imported goods, enabling officials to directly monitor the flow of goods and follow up on instances of tax evasion, which could in turn generate more revenue, Palestinian officials said.

The Palestinian Authority is reeling from a sharp drop in foreign aid following its campaign for statehood at the United Nations last year.


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