Izrael to withhold NIS 450 million in taxes from PA

The unilateral Palestinian efforts to gain nonmember observer state status at the U.N., which was approved by an overwhelming majority in the General Asssembly last week, sparked a sharp Israeli response over the weekend: After a list of suggestions and ideas, including dismantling the Palestinian Authority, were rejected by the Political-Security Cabinet, it was decided to approve the construction of 3,000 new housing units beyond the Green Line.

„We are building, and will continue to build, in any location that serves Israel’s strategic interests,” Prime Minister Benjamin Netanyahu said at the start of the weekly cabinet meeting on Sunday.

Netanyahu began the meeting by quoting the late Prime Minister Yitzhak Rabin, who, in 1975, approved expanded settlement construction in response to a U.N. resolution comparing Zionism to racism. „The proper response to any attack on Zionism and the State of Israel requires an increase and acceleration of settlement,” Netanyahu quoted Rabin as saying.

In response to Thursday’s U.N. decision, Netanyahu said, „No Palestinian state will be established unless it recognizes Israel as the state of the Jewish people and declares an end to the conflict and to [Palestinian] demands.”

Finance Minister Yuval Steinitz said on Sunday that in response to the U.N. move, he planned to delay the transfer of 450 million shekels ($118 million) in tax money Israel had collected on behalf of the Palestinian Authority.

„The provocation is a Palestinian provocation, an effort to advance the establishment of a [Palestinian] state without recognizing Israel, without demilitarizing and without proper security arrangements,” Steinitz said at the cabinet meeting. „We warned that we would respond. I do not plan to transfer funds this month. I will subtract the sum from their debts.”

In regard to the decision to approve settlement construction, Steinitz said, „We told the Americans that if the Palestinians went to the U.N. there would be a response.”

The political echelon’s decision over the weekend included immediate approval for the construction of 3,000 new housing units in certain neighborhoods of east Jerusalem as well as in Judea and Samaria, areas the Palestinians claim for a future state.

It was also decided to advance the E1 plan, which aims to separate the West Bank from Jerusalem by creating a physical link between the town of Maaleh Adumim in the east and the neighborhoods of northern Jerusalem. This plan includes the construction of 1,000 additional housing units.

Washington has long condemned the E1 plan, devised in 1995, as effectively sabotaging any prospect of a peace agreement between Israel and the Palestinians. According to a New York Times article published Saturday, Israel only gave the U.S. „a few hours’ notice of the plan,” sparking outrage. In the past, the main clashes between U.S. President Barack Obama and Netanyahu have been over construction in Jewish settlements.

Speaking at the Saban Forum in Washington on Friday, U.S. Secretary of State Hillary Clinton slammed Israel’s decision, saying “These activities set back the cause of a negotiated peace.”

However, Defense Minister Ehud Barak told his colleagues in the American administration over the weekend that such a response on behalf of the Israeli government was to be expected, Israel Radio reported.

An official source in Jerusalem reported Saturday that Israel was „considering further steps” and that „the continued construction is undertaken in accordance with Israel’s strategic objectives.” Foreign Minister Avigdor Lieberman remarked that construction beyond the Green Line is „a part of our security outlook.”

According to Netanyahu’s close associates, the construction push does not violate any agreement with the American administration. The officials declined to detail the exact location of the planned construction, but confirmed that it would be within existing settlement blocs, Israel Radio reported.

Meanwhile, Housing Minister Ariel Atias (Shas) defended the government’s decision on Sunday, telling Israel Radio that it would be futile to freeze settlement construction while Palestinian Authority President Mahmoud Abbas waged a delegitimization campaign against Israel. He recalled Abbas’ refusal to resume peace talks despite a 10-month Israeli construction freeze back in 2010, adding that his ministry was committed to increasing the available housing across the country.

On Saturday, Britain and France also condemned Israel’s plan, saying international confidence in its desire to make peace with the Palestinians was at risk.