Israeli Prime Minister Benjamin Netanyahu said Monday that Israel was considering the release of Palestinian tax revenues, which it has frozen for over a month.
Netanyahu is expected to announce the proposal during a Monday discussion in the Knesset's foreign affairs and defense committee, the Israeli daily Haaretz reported.
Netanyahu's aide said that the change in policy would be in the interest of preventing the collapse of the Palestinian Authority.
The decision to reconsider withholding the funds was also influenced by the fact that the PLO had not pursued moves in other international organizations, Netanyahu said.
Israel froze the transfer of funds owed to the West Bank government, amounting to around $100 million a month, after the UN cultural agency UNESCO voted to admit Palestine as a member on Oct. 31.
Prime Minister in the Ramallah-based government Salam Fayyad said Thursday that the PA was "fast approaching the point of being completely incapacitated" by the tax block.
The UK's top diplomat to the Palestinians Vincent Fean last week echoed Fayyad's call, saying that "these are funds that belong to the Palestinian Authority by right and Israel has an obligation to transfer" the money.
Norwegian Foreign Minister Jonas Gahr Stoere said last week that the Israeli policy to withhold funds "amounts to waterboarding an economy, because you almost kill it while allowing a small amount of air to come in."
When Israel froze revenues earlier this year after Hamas and Fatah signed a unity deal, the PA delayed salary payments to all its employees for the first time since 2007.
Israeli Deputy Foreign Minister Danny Ayalon said Saturday in a live television debate that if the PA collapses it "will not be the end of the world for Israel."
"The tax revenue which Israel transfers to the PA is meant to help them stand in the face of Hamas, and since Mahmoud Abbas allied with Khalid Mashaal, this money will not be delivered from now on," Ayalon said.
President Mahmoud Abbas and Hamas leader Khalid Mashaal met last Thursday in Cairo to discuss implementing a reconciliation agreement signed in May.
Under the terms of an economic agreement between Israel and the Palestinians signed in Paris in 1994, Israel transfers customs duties levied on goods destined for Palestinian markets each month, which amount to around half of the PA's domestic revenue base.
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