Israel's Finance Minister Yuval Steinitz holds a press conference in Jerusalem, February 23, 2010.
Credit: Reuters/Ronen ZvulunBy Ori LewisJERUSALEM | Sun may 1, 2011 8: 31 am EDT
Jerusalem (Reuters)-Israel has suspended tax transfers to the Palestinians, the Minister of finance said on Sunday, for fear of the money will be used to finance Hamas after President Mahmoud Abbas struck a deal with the Islamists.
The Palestinian Authority (PA), led by U.S.-backed Abbas, asked of foreign powers to prevent Israel blocking transfers, allowing up to 70% of the income. A senior Palestinian official said Israel, by its action, had "a war started."
Israeli Finance Minister Yuval Steinitz said he had suspended a routine transfer of 300 million shekels (88 million dollars) in customs and other charges which Israel on behalf of the Palestinians under interim peace deals collects.
Steinitz said in an interview on Israel Army Radio, which feared the money for the funding of Hamas, an Islamic militant group that runs the Gaza Strip and whose Charter calls for the destruction of the Jewish State.
Israel had threatened sanctions last week in response to Abbas surprise announcement of a Hamas unit which provides for the formation of an interim Government and elections later this year.
Palestinian Prime Minister Salam Fayyad said the PA was "in contact with all international parties and influential forces to stop Israel from taking these measures," the official WAFA news agency reported.
"Threats ... will not stop us to close our reconciliation process. It is our policy and we must work harder to finish our divisions as soon as possible, "added Fayyad.
The PA is also heavily dependent on donor support, including the United States, who said that future assistance will depend on the shape of a new Palestinian Government, expects to be formed under the agreement unit.
ISRAELI OPPOSITION
In public comments, the Israeli Cabinet, Prime Minister Benjamin Netanyahu confirmed his opposition to the unity pact and said that the reconciliation "all those in the world," Middle East want peace to worry.
"Peace is possible only with those who live in peace with us, and not with those who want to try to destroy us," said Netanyahu, who came to Britain and France later this week for talks with their leaders.
Palestinian leaders have been invited by Egypt to Cairo for a three-day ceremony begins on Monday, which will end with the signing of the agreement of the unit, Palestinian officials said.
Abbas spokesman Nabil Abu Rdainah said it could take up to six weeks to form a new Government. He said that it would be made up of Independents with no connection Abbas the Fatah movement, or Hamas, and foreign States should have no reason to boycott it.
Hamas is shunned by the West about his refusal to recognize Israel, renounce violence and accept the interim peace agreements.
U.S.-backed Israeli-Palestinian negotiations on a permanent peace agreement were revived in September but quickly fizzled after Netanyahu refused to extend a limited moratorium on building in Jewish settlements in the West Bank, territory Palestinians want as part of a future State.
Abbas has said he would return to negotiations unless construction in settlements in the West Bank and East Jerusalem, areas Israel in a 1967 war caught, was stopped. Netanyahu has said that is an unacceptable condition for negotiations.
Tax transfers make the PA, which uses limited self-rule in the West Bank, with $ 1 billion to $ 1.4 billion per year. Saeb Erekat, a senior Palestinian official, said that by withholding the money, "Israel has a war began even before the formation of the Government."
Steinitz noted that Israel tax revenue in the past, during a Palestinian uprising that began in 2000 had held back.
(Additional reporting by Ali Sawafta and Tom Perry in Ramallah, writing by Dan Williams and Ori Lewis; editing by Mark Trevelyan)
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