Israel halts PA funds transfer to Norway as 'punishment' for Palestine recognition

Israel has stopped transferring Palestinian tax revenues it collects to Oslo to punish Norway for recognising Palestine.

Through the move, Israel is also expressing anger at strong-worded statements by the Norwegian foreign minister against Israel and the country's failure to object to the International Criminal Court (ICC) arrest warrants against Israeli officials.

The tax funds in question are Gaza's share of tax revenue due for transfer to the PA, which Israel collects and is supposed to transfer on in accordance with measures established in the Oslo Accords.

Under Oslo's terms, still in place, Israel collects tax on behalf of the Palestinians and theoretically makes monthly transfers to the PA - pending the approval of Israel's finance ministry.

Israel has been refusing to transfer the share allocated for Gaza since November 2023, when the funds were frozen.

In January 2024, a settlement was agreed in which Israel transferred Gaza's share of the revenue to a Norwegian-based trust account.

However, on Wednesday, Israeli news website Ynet reported that Israel was looking for a new country to guard the funds, after a recent decision taken by Israel's State Security Cabinet, which was kept confidential.

The development dates back to May after Norway recognised a Palestinian state.

Following the move, Israel's far-right Finance Minister Bezalel Smotrich announced that the funds would be "retrieved" and that transfers to Norway would cease.

"Norway was the first to unilaterally recognise a Palestinian state today, so it cannot be a partner in anything related to Judea and Samaria (the occupied West Bank). I intend to stop transferring funds to Norway and demand the return of all funds that were transferred," stated Smotrich.

Norway also issued a written observation to the ICC recently clarifying that it made no objection to the issuing of arrest warrants against Israeli PM Benjamin Netanyahu and Defence Minister Yoav Gallant.

The Scandinavian country highlighted in its observation that the Oslo Accords, which it had sponsored in 1993, did not affect the court's jurisdiction.

According to Ynet, Israel, with US assistance, is now pursuing an agreement with Switzerland, to take Norway's place.

The Israeli news site stated that Israel was using multiple resources to convince Switzerland to allow the confiscated revenues to be held there instead of Norway, adding that Israel's Minister of Strategic Affairs, Ron Dermer, visited Switzerland recently for talks.

Moreover, the Israeli foreign ministry is working on additional punitive measures the country can take against Norway, which Israel views as being its most hostile critic in Europe.

Recently, Israel recalled its ambassador from Norway (Avi Nir-Feldklein) to hold consultations following Norway's recognition of a Palestinian State, although the Israeli embassy in Oslo is still open.  

In January the Israeli cabinet approved the proposal to transfer tax funds earmarked for the PA to Norway after Smotrich's refusal to transfer the funds prompted fears the PA could collapse.

The US proposed that as a solution, Israel could transfer approximately 200-250 million shekels per month to a fund in Norway that would accrue interest while Israel would transfer the remaining funds to the PA.

Estimates indicate that around one billion shekels are currently held in the Norwegian account.

This article is based on an article which appeared in our Arabic edition by Naif Zidane on 7 August 2024. To read the original article click here.