Israeli cabinet votes for Norway to hold contested Gaza fees in escrow

Israel's security cabinet sought to prevent diplomatic and political tensions by approving a plan to place in escrow in Norway the tax fees it collects on behalf of the Palestinian Authority, which are earmarked for Gaza.

The Prime Minister’s Office said that both the United States and Norway have approved of the plan for the monthly transfer of some NIS 270 million and that the US was its guarantor.

“The frozen funds will not be transferred to the Palestinian Authority but will remain in the hands of a third country,” the PMO explained.

It “will not be transferred under any circumstances, except with the approval of the Israeli Finance Minister [Bezalel Smotrich], not even through a third party.

Palestinians reject Israeli involvement in Palestinian funds

 “Any violation of the agreement would allow the Finance Minister of Finance to immediately freeze all” of the tax fees Israel collects on behalf of the PA.

The plan is considered to be a victory for Smotrich, who heads the Religious Zionist Party and has insisted that tax fees can’t be spent on Gaza.

“Not a single shekel will go to Gaza,” Smotrich said in a post on X after the vote, “and this time the policy is backed by America.”

Smotrich has sought since the start of the war to prevent the transfer of the tax fees to Gaza.

National Missions Minister Orit Struck (RZP) congratulated Smotrich in a post on X in which she called the cabinet decision “an impressive political move.”

She noted that this comes after Smotrich “convinced the cabinet to deduct from the Palestinian Authority's budget the money intended for Gaza” in addition to the funds already deducted to offset the PA’s monthly payments to terrorists and their families.

The United States and Norway accept Israel's position

“Now the US and Norway also accept Israel's position that transferring the money to Gaza is illegitimate.And the key - is solely in the hands of the Finance Minister, including punitive measures,” Struck said, adding that “that’s how things should work.”

National Security Minister Itamar Ben-Gvir opposed the plan, explaining that it would not prevent Palestinians in Gaza from receiving the funds.

“Unfortunately, Prime Minister Benjamin Netanyahu constantly moves the red line,” Ben Gvir said. There are those on the right who are still operating under the failed conceptions that allowed for the Hamas-led October 7 attack against Israel, Ben Gvir stated.

The Palestinians rejected the plan. PLO Executive Committee Secretary General Hussein Al-Sheikh posted on X that "Any deductions from our financial rights or any conditions imposed by Israel that prevent the PA from paying our people in the Gaza Strip are rejected by us.

“We call on the international community to stop this behavior based on piracy and stealing the money of the Palestinian people and force Israel to transfer all of our money,” he wrote.

The PA has insisted that based on the 1994 protocol on economic relations between the two entities, Israel must transfer the fees.

US President Joe Biden discussed the transfer of Palestinian tax fees with Netanyahu when the two men spoke on Friday. According to the White House, the two leaders discussed the “recent progress in ensuring the Palestinian Authority’s revenues are available to pay salaries, including for the Palestinian Security Forces in the West Bank.”