Palestinians say they receive Israeli part-payment of overdue taxes

RAMALLAH, Palestine — The Palestinian Authority (PA), in deep financial crisis since Israel froze tax transfers in February, said Thursday it had accepted a partial payment of just over half a billion dollars.

"An agreement was reached a few days ago with the Israeli side for transferring duties on oil and fuel which the Palestinian Authority bought in Israel to the amount of around [$568 million]," Civil Affairs Minister Hussein Al-Sheikh told AFP.

Israel in February decided to withhold around $10 million a month from revenues of some $190 million per month it collects on the PA's behalf, triggering Palestinian President Mahmoud Abbas to say he would accept either all or nothing.

The deduction corresponds to what Israel says the PA paid Palestinian prisoners in Israeli jails, or their families.

Prisoners who have carried out attacks on Israelis are among those receiving the payments, and Israel says the policy encourages further violence.

Abbas accused Israel of blackmail and insisted on the full amount, which accounts for around 65 per cent of PA revenues.

The money comes from customs duties levied on goods destined for Palestinian markets that transit through Israeli ports.

On Monday, President Abbas fired all of his advisers amid a financial crisis in the occupied West Bank that has prompted deep salary cuts.

Palestinians view prisoners as fighting against Israel's occupation and say the tax funds support families that have lost their main breadwinners.

The PA has cut salaries for most of its tens of thousands of employees by half to keep the government afloat.

On top of the tax dispute with Israel, the United States has cut hundreds of millions of dollars in aid to Palestinians via various programmes.