RAMALLAH // Israel yesterday stopped payment of US$120 million in tax revenue to the Palestinians, as the government of prime minister Benjamin Netanyahu punished them further for their successful UN statehood bid.
Hours later, Mahmoud Abbas, president of the Palestinian Authority, returned to Ramallah and was greeted by thousands of supporters after last week's vote by the UN general assembly.
Israel's finance minister Yuval Steinitz said last month's revenue would be used to pay the PA's debt to the Israeli electricity company.
"We said from the beginning that the raising of the status of Palestine at the UN would not produce no reaction from Israel," Mr Steinitz said.
"I have no intention of transferring the taxes due to the Palestinian Authority this month."
Israel's Haaretz newspaper reported that meant a total of $120m (Dh450m).
That could worsen a PA economy already crippled by donor countries that have failed to pay promised aid money - including Arab statesand the US, which withheld $200m after the Palestinian UN bid last year - and the impediments of Israeli occupation.
In recent months, the West Bank administration has repeatedly failed to pay its workforce of about 150,000 their salaries.
The UN vote recognised Palestine - the West Bank, Gaza Strip and East Jerusalem, areas still occupied by Israel - as the 194th state in the general assembly.
Calling this clear evidence of world support for the Palestinian statehood, Mr Abbas said the measure's success was a, "Yes to the State of Palestine. Yes to our freedom. No to Israeli settlements and occupation".
"The world is with us! History is with us! The future is ours!" he told crowds of PA employees and schoolchildren in Ramallah yesterday.
Israel's right-wing government has sought to dampen such enthusiasm with a series of measures that began on Friday with an announcement to build 3,000 more houses in the West Bank.
Israel has suspended revenue payments in the past for months at a time. Such actions breach the 1994 Paris Protocol, an economic accord that was signed as a temporary measure by Israeli and Palestinian negotiators as part of the Oslo peace process.
In addition to forming a customs union and similar tax rates, the protocol obliges Israel to transfer the monthly tax revenues it collects on behalf of the PA.
Israel and the US were two of only nine countries that voted against last week's UN measure. Both demand the Palestinians return to direct peace talks that broke down two years ago because Mr Netanyahu refused to stop building settlements.
He yesterday rejected the Palestinians' UN move as a "one-sided step at the UN" that "constitutes a gross violation of the agreements that have been signed with the state of Israel".
But some Israelis have attacked Mr Netanyahu's response to the Palestinian UN move.
In a speech to academics and US officials in Washington, DC on Saturday, Ehud Olmert, a former Israeli prime minister, criticised Mr Netanyahu's announcement on Friday of more settlements as a "slap in the face" to the administration of the US president, Barack Obama.
That announcement included 3,000 new settler homes and sped up plans for building a settlement in an area vital for a viable Palestinian state, connecting the West Bank with East Jerusalem, known as E-1.
Despite the Israeli measures, crowds in Ramallah expressed enthusiasm.
"Israel always threatens us no matter what we do," said Ayyoub Fuqaha, 28, a history student at Jerusalem's Al Quds University.
"We are proud of our state and what our president, Abu Mazen, has achieved," he added, referring to Mr Abbas's nickname.
* With additional reporting from Agence France-Presse