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Israel’s Economic Sanctions

Israel will soon decide whether to resume turning over the taxes and custom fees it collects on commercial traffic into and out of the West Bank on behalf of the PA as required by the Oslo Accords. The Netanyahu government, as a means of expressing opposition to the PA’s recent attempts at winning United Nations membership and its renewal of power-sharing talks with Hamas, has been freezing the funds since the PA was granted full membership in UNESCO in late October

Naturally, Israel’s action was met with a crescendo of international condemnation. Whether or not Prime Minister Netanyahu eventually decides to resume the payments, a review of the facts reveals that Israel is acting as other nations have, even at the present time. It would appear the criticism is yet another example of the international community’s seeking to deny to Israel the rights all other sovereign nations take for granted. This, of course, only serves to fuel Palestinian recalcitrance.

There is no denying that the Israeli policy is serious business. The withheld funds typically amount to approximately $100 million a month and constitute two-thirds of the PA’s revenues. The October funds were not turned over and, as of now, neither will the November receipts. Because of the international financial crisis, foreign donors cannot pick up the slack and have even reneged on past pledges. Apparently, the PA is desperate and government salaries due on December 1, which support one million Palestinians, will go unpaid.

“With each passing day, the Palestinian Authority becomes weaker and is fast approaching the day when it becomes completely incapacitated,” said Prime Minister Salam Fayyad.

He added that “If we can’t meet our contractual obligations, that has a chilling effect on the private sector. This undermines confidence in the Palestinian Authority’s capacity to function, which has a debilitating effect on investor confidence. Like a family, a government can make do with less – but not a drop of two-thirds.”

United Nations Secretary General Ban Ki-moon  and senior American officials, including Secretary of State Clinton, have joined in a plea to Mr. Netanyahu to resume transferring the funds. (The UN chief inadvertently added a humorous note when, as reported by the Associated Press, he “stressed the need to de-escalate the current situation in order to help create an environment conducive to reviving the peace process.”)

Tony Blair, the representative of the so-called Quartet, consisting of the United States, Russia the European Union and the United Nations, chimed in with “Only those who oppose peace and Israeli-Palestinian cooperation benefit from the withholding of P.A. funds,“ doubtless alluding to the common refrain that a weakened PA would be compromised in its ability to restrain terrorist groups.

An Israeli spokesman, in discussing the transfer freeze, referred to UNESCO’s granting full membership to the PA as the proverbial last straw. “We wanted to make clear this could not be business as usual. The idea is to influence Palestinian decision-making.”

Plainly, there were other developments sufficient in their own right to convince Israel it had to act.

President Abbas was noticeably silent after the recent rocket attack on southern Israel that resulted in a fatality. Mr. Abbas went out of his way to praise the abduction of Gilad Shalit and called the Palestinians released in exchange for Shalit – many of whom are convicted murderers of Israelis – as heroes and patriots. He subsequently granted them stipends and free housing. He has also reiterated that he will never recognize Israel as a Jewish state and has been reaching out to Hamas in direct violation of the Oslo Accords.

The largesse to the freed Palestinians was particularly rankling. It was one thing for Israeli leaders to swallow hard and free all those murderers in return for Shalit. It was quite another for Israel to have to facilitate the well being of those murderers, even if one believes the frozen funds rightfully belong to the PA.

It is important to appreciate the overall context in which all of this is occurring.

Over the past few years the UN has imposed various economic sanctions against Iran because of its efforts to achieve a nuclear weapons capacity.  Last week the U.S., Britain and Canada announced new sanctions on Iran’s energy and financial sectors.

At a press conference directed at financial institutions, Treasury Secretary Timothy Geithner said: “If you are a financial institution and you engage in any transaction involving Iran’s Central Bank or any other Iranian bank operating inside or outside Iran, you are at risk of supporting Iran’s illicit activities: its pursuit of nuclear weapons, its support of terrorism, and its efforts to deceive responsible financial institutions and evade sanctions.”

Also last week, Congressmen Ted Deutsch (D-Fla.) and Steve Israel (D-N.Y.) asked U.S. Comptroller Gene Dodaro to investigate the Palestinian Authority’s use of American funding, noting the above mentioned PA policy of granting the released prisoners a stipend and free homes. They also wanted to know whether American funds were being used to fund President Abbas’s “trips around the world on his misguided attempt to unilaterally declare statehood at the United Nations…efforts that are in direct contravention of U.S. policy.”

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