Israel Hits Back at Palestinians After United Nations Vote

Israel withholds Palestinian tax revenue and announces new settlement construction.

Palestinian president Mahmoud Abbas in Paris, France, June 14, 2010
Palestinian president Mahmoud Abbas in Paris, France, June 14, 2010 (Olivier Pacteau)

Six days after Israel suffered a resounding defeat at the United Nations over the status of Palestine, Prime Minister Benjamin Netanyahu and his coalition government have come out swinging. Calling Palestinian president Mahmoud Abbas’ push for nonmember state status in the body irresponsible to the establishment of a two-state solution, Netanyahu issued his own unilateral move in retaliation.

The Israeli government decided to withhold approximately $100 million in taxes and customs duties that it collects for the Palestinian Authority as punishment for Abbas’ campaign. The money, which would normally be transferred to the Palestinians’ coffers, will reportedly be diverted to Israel’s Electrical Corporation where the Palestinians have accumulated a debt of $200 million. Delaying the transfer of tax revenues to the Palestinian Authority has been a quick and effective way for Netanyahu to register his dissatisfaction whenever Mahmoud Abbas does something that Israel views as unproductive.

On the face of it, refusing to provide a financially distressed Palestinian Authority with the cash that it needs to pay its employees and run services seems to be an especially strong reaction to last week’s United Nations vote. But it is nothing when compared to an announcement from Israel that it is speeding up plans to build apartment units on a plot of land that has long been considered off limits by the international community.

The area, known as E1, is a roughly five mile patch of rocky hilltop located to the east of  Jerusalem, the eastern half of which the Palestinians want for their capital. Any building in the area would effectively split the West Bank into two distinct zones while making it nearly impossible for Palestinians there to travel to East Jerusalem.

Plans for building in E1 had been postponed by previous Israeli governments over American and European objections. The reaction to the announcement has been equally strong from European governments, the United Nations, the United States and Palestinian envoys.

Whether or not Netanyahu will back down from this latest settlement enterprise is perhaps contingent on just how much pressure he feels from the international community. Israel confronted a swath of criticism from five European powers on Monday where their ambassadors were summoned and told by their host countries about just how devastating the building project would be to the two-state solution. When combined with a lackluster performance at the United Nations General Assembly, where only eight countries voted with Israel in opposing the Palestinian bid, Netanyahu cannot afford to lose even more global support.

Building on E1 is not inevitable. If President Abbas chooses to begin another round of direct peace negotiations, something the Israelis have asked for for years, Israel may find it difficult to go through with the plan.

The most common assumption in the Israeli-Palestinian peace process is that halting Jewish settlement construction would provide the Palestinians with enough confidence to sit at the table. In this case, the formula may be reversed: a move by Abbas to sit down with Netanyahu may give the Israeli premier enough of a reason to postpone settlement building in E1 or postpone it indefinitely.