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Israel announced Sunday it would be withholding $100 million in tax revenues from the Palestinian Authority.
Israel is withholding $100 million in tax revenues it collects on behalf of the cash-strapped Palestinian Authority in a protest over the UN vote to recognize the Palestinian territories as a "nonmember observer state," reports the Los Angeles Times.
Israeli Finance Minister Yuval Steinitz told Israel Radio: "I do not intend this month to transfer the funds to the Palestinians. In the coming period I intend to use the money to deduct debts the PA owes to the Israel Electric Corporation and other bodies."
Steinitz said that the Palestinians owe Israel's electric company an estimated $180 million for power supplied to parts of the West Bank.
The LA Times reports that the withholding may be temporary but it will have a huge impact for the Palestinian government, which has been suffering from large budget deficits and has been unable to pay full salaries for months.
Yasser Abed Rabbo, a senior Palestinian official, said that Israel was guilty of "piracy and theft" by refusing to give Palestine the funds, reports the Guardian newspaper.
Another Palestinian official called the withholding of tax revenue an "act of desperation" after the world proved its support for a Palestinian state.
According to Israel's Haaretz newspaper,the move is a direct reaction to the UN vote, which passed 138 to 9. The switch from "entity" to "non-member state" was a symbolic step in Palestine's bid for full recognition on the world stage.
Israel's announcement Sunday was the second retaliatory move made against Palestine in as many days. Israel announced on Friday that it planned on building 3,000 new homes in settlements in East Jerusalem and the West Bank.
The prospect of more financial hardship did not seem to dampen the mood of Palestinians thrilled at the outcome of the UN vote in New York.
The Guardian reportsthat around 5,000 people gathered near the presidential compound in Ramallah on Sunday to greet Palestinian Authority president, Mahmoud Abbas on his return from the US.
The world had said a loud "yes to the state of Palestine", he told the crowd.